Sunshine-Empire & EmMax

Not too long ago I was working on a business deal with a millionaire. My role was to prospect for a new business opportunity. I spent a lot of time searching for the right opportunity and I came up with an idea that I thought would work.

I presented the idea to the millionaire and we decided to take a closer look. Over the course of a year I did the market analysis, financial projections, and created a business plan. It came down to decision time and -

The millionaire walked away.

I was so upset. I thought to myself that I had wasted time. It was worth nothing.

Within the next 6 months the country fell into a deep recession. Companies went out of business. People lost their jobs, homes, and retirement portfolios. Many lives changed. I am sure that you were affected also. Had we made that investment, we'd have suffered a significant loss.

The millionaire could foresee what might happen and he protected himself from it. The conditions weren't suitable for him so he refused the opportunity.

Now when I look back on that experience I realize the valuable lesson that I learned:

Millionaires don't take risks.

My perception was always that millionaires lived life on the edge. I thought that they enjoyed speculating and taking risks, when in fact the opposite holds true. Millionaires only bet if the odds weigh heavily in their favor. They wait for the right conditions and then BET BIG.

If you are in a situation where you are considering making a large investment, here are four investing rules that you might find helpful:

1. Invest in what you know. Stay inside your circle of competence.
2. Expect reasonable earnings. If it sounds too good to be true, it likely is.
3. Seek wise mentors. Surround yourself with people who have experience and have your best interests in mind.
4. Protect yourself from the downside. Ask yourself - What is the worst that could happen? If you can live with your answer, then that is a very good sign about what decision you must make.

I don't wish to discourage you or scare you away from an idea you would like to pursue. My goal here is to share a meaningful story with you and to offer you a mental framework for making investment decisions.

Most endeavors we pursue don't have huge financial consequences. If you're afraid of failure or what others may think - please know that these are probably emotional fears and not financial risks. Typically, you have nothing to lose, and everything to gain. Always bet big on yourself. Go for it.

However, when the stakes are high, remember my story of the millionaire. I learned a lot from that experience and I am fortunate to have had him as my guide. What I initially thought was a defeat turned into one of the most important business lessons of my life.

What are your thoughts?

As always, thank you reading and have an excellent week.

For more information on achieving your leadership goals please visit Margin of Excellence.

Labels: Avert, Guidelines, Investing