February 24, 2023 - By: Brandon Jenkins

Porch with ascending steps, with flowers and American flags inside planters.

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/