Fearlessness, Fairness, and Preparation

Ken McElroy, a recent presenter at our annual Planning for Prosperity investor symposium and real estate advisor for Rich Dad Poor Dad, shared on his blog a while back some takeaways from Warren Buffet. Much of the advice found online for entrepreneurs is just as relevant and applicable to investors with self-directed IRAs. Any investment you make is a big and brave business decision, so if Warren Buffett says he takes six different factors into consideration when he’s in the process of making big and brave business decisions, shouldn’t investors consider those factors as well?

Ken broke down his favorite three lessons from Buffett, and we agree they’re useful tips for investors:

1.) It has to be a big choice and a big win

Buffett prefers the go big, go bold method. He typically acquires “large purchases (at least $75 million of pre-tax earnings unless the business will fit into one of our existing units).”

2.) The decisions has to create value for you consistently and currently

The phrase of “it’ll pay off in the long run” does not apply when it comes to Warren Buffett’s decision making. Your choices should be valuable and make a real-life (current) impact. Consistent earning power is key.

3. The decision will benefit everyone who’s invested in it, and it won’t leave anyone hanging

Buffett wants “businesses earning good returns on equity while employing little or no debt.” Meaning no one investing money, sweat, or tears will come out at the end with less than they started.

As Ken has pointed out, “the themes here are fearlessness, fairness, and preparation – which are all great takeaway lessons to apply towards all aspects in our lives.”

You can read more of Ken’s thoughts on his blog at www.kenflix.com

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