You’re trying to figure out whether or not you are an active investor or you’re passively investing. Well, in this video I’m going to give you a couple things to think about so that you can actually get on track, coming up. Hey there, it’s Billy with KeePon CashFlow, helping you to grow your money and your mindset so that you can get to the lifestyle that you really want to be leading and doing that much faster.

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As for today, I want to get back to this whole question of whether or not you are an active investor or maybe passively sleeping at the wheel. The reason that this came up is, like most of the things, I was recently speaking to one of my students and in a conversation we really got into the question of investing. We were talking about things like 401k’s and we got really deep into the conversation to the point that we started talking the difference between a defined benefits plan versus a defined contribution plan.

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Now, a lot of that stuff happened around 1974 in the United States and it really changed the way that we look at investing today. I’m sure I’m going to take care of that in another video because before we even get there I wanted to take a couple of steps back, which is this whole question of whether or not, as you are doing today, it’s active or passive and what could be the most important thing for you and your family. I like to think of, like most of us, especially those of us that have children, when we think about children and how we are going to leave a legacy for our children it’s not just about are we taking care of them financially but also too are we taking care of them mentally and physically.

One of the things that I like to think about a lot is really taking my children or you think about taking your children to the doctor’s office. One of my mentors once told me that giving a prescription without an exact diagnosis is like malpractice and it’s very similar to investing. Just stay with me and you’ll be really clear in just a second. Can you imagine taking your child to the doctor’s office, your child’s not feeling very well, and when you get to the doctor’s office the doctor asks how your child’s doing? Before your child can even say anything your doctor prescribes a massive amount of pills in a huge, huge, huge bottle and says, “Just take these and you’ll be fine in about 10 or 20 years.”

One of my mentors once told me that giving a prescription without an exact diagnosis is like malpractice and it’s very similar to investing.  – Tweet  

Well, as a parent you would probably feel a little bit strange about that. On the other hand, if you take the same child who’s not feeling well, you take him to the doctor and the doctor says, “How are things going? How are you feeling? Do you have a headache? Do you have a temperature? have you been feeling nauseous?” Et cetera, et cetera, et cetera, and at the end of the consultation gives you a very specific prescription and tells you to have your child take this for the next five to seven days. As a parent I’m going to assume that the second scenario makes you feel much, much better.

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Why am I telling you that story? It’s really no different when you start thinking about your investing and whether or not you’re an active investor or you’re maybe passively sleeping at the wheel. You see, when I was talking to my student the other day we got into the discussion and really realized that a lot of passive investors today are very similar to the first scenario. You have your 401k or you maybe have your IRA and you’re blindly putting your money into, every month, into a fund that becomes a very, very big bottle that maybe at the end of your retirement will be enough to keep you healthy or to heal you.

Some of the challenges with that are you continue to change during your life so the things that you want to invest in you probably need to adapt those as well. You want to make sure that, yes, although you’re investing, to be … Well, not just turn it over to someone else, turn your livelihood or your legacy that you’re going to have for your children over to someone else. That’s really thinking about passively sleeping at the wheel or passively sleeping on the plane. On the other hand, if we go back to the second scenario with the doctor it’s very similar to really active investors.

You have your 401k or you maybe have your IRA and you’re blindly putting your money into, every month, into a fund that becomes a very, very big bottle that maybe at the end of your retirement will be enough to keep you healthy or to heal you.  – Tweet  

What I mean by being an active investor is that you’re someone who is asking the questions of when you are looking to place your capital. You want to understand the specific timeframes and you want to work with somebody who also is asking you where you are in your life today, what are you wanting to be able to do, what type of legacy are you looking to leave for your children, et cetera, et cetera, et cetera. You’re really taking a much more proactive approach to investing, you’re really asking the questions and being asked questions by the person or people that you want to help you build your legacy for yourself, for your children, for your family.

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That’s one of the things that when you participate as an investor and you’re active, this will really help you move things forward. Like I said, a lot of times people get confused on terms of being an active investor and what that could possible mean, and really being a passive investor or kind of like I would say if you’re piloting a plane you’re maybe just sleeping behind the gears. When you think about being an active investor it’s really about making sure that you’re investing in something that’s going to provide you a return that is right for you in a specific amount of time that you can actually see moving forward.

Hopefully, this has helped to clarify some of the things around what it is to be an active investor and also some of the challenges that can be around being a blind, passive investor, if you will. Like I said in the beginning, if you found this video to be useful I’d like to ask you to share it with your friends, share it with your community members. If there’s something that wasn’t clear for you I’d like for you to also leave a comment here because I want to make sure that I can get back to you as quickly as possible and that we continue to help you become a much more educated investor.

Once again, this is Billy Keels with Keep On Cash Flow, that’s my two cents for today. As always, Hasta la Próxima!

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You can also check out my latest podcasts and collaborations here keeponcashflow.com/podcasts/