What are some of the biggest challenges you face when making asset purchase decisions?
As a real estate investor, using a decision-making framework has helped me navigate numerous investment opportunities.
Here’s how I set mine up:
1. I start with the core principles of:
- Risk mitigation
- Access to liquidity
- The amount of control I have
2. I categorize assets into four tiers based on how well they align with these principles:
- Tier 1: Guaranteed protection and growth, easy access to values, and lots of control.
- Tiers 2-3: Elevated risk of loss (lack of guarantees), harder to access the higher the tier, and less control.
- Tier 4: Difficult to access the values, no guarantees, and no control.
3. I have specific targets for the percentage of total equity I want to distribute across these tiers, which would vary based on your goals. For example:
- Tier 1: 40%
- Tier 2: 40%
- Tier 3: 15%
- Tier 4: 5%
4. When presented with an asset purchase opportunity, I analyze it against this framework.
However, if a once-in-a-lifetime opportunity falls outside of my targets, I can still choose to invest.
The framework does not make decisions for me; it helps me:
- Avoid impulsive decisions
- Stay focused on my principles
- Examine my options objectively
What are your own decision-making frameworks or tips for managing asset purchases?
Do you have someone on your team helping you with these concepts? If not, please reach out to us at https://www.tieronelifeinsurance.com/contact/