The 4 Most Common Passive Investing Mistakes

I see these 4 mistakes all the time, and they can ruin our investing plans… not to mention lose you money and halt your freedom journey.

Listen and learn what NOT to do if you want to build your cash flow TODAY and not worry about retirement. Listen now!

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Speaker 1 (00:00):

Your finances are not working together. What does that mean? No, because we could do so much better outside of that box, little minded way of thinking that all those insurance agents have, because they’re insurance agents, they’re not investors. They’re got tiny, little, tiny little thinking, tiny little boxes that they’re living in. Hello. It’s your money. You are the boss, not them. You boss them around. We’ll just try this out. We’ll try that out. Stop it. Be intentional. Be focused.

Speaker 2 (00:32):

Chris Miles was able to retire twice by the time he was 39 years old, but he’s not content to just enjoy his own financial freedom and peace of mind. Chris wants you to have your own ripple effect so you can live free today. He’s not the financial advisor you expected. He’s the anti Financianal advisor you deserve. He’s jumping behind the mic right now, ready to make waves. Here’s Chris Miles.

Speaker 1 (01:03):

Hello my fellow Ripples. This is Chris Miles, your cashflow expert and anti financianal advisor. Welcome to our show. That’s for you. Those of you that work so hard for your money and you’re not ready for your money, start working harder for you too. You want that freedom and cashflow right now. You don’t want to wait 30 or 40 years because you know that if you take control of your life today, you can be with those that you love doing what you love. But most importantly, I know it’s not just about getting rich, although we love that too. It’s about living a rich life because as you’re blessed financially, you have a greater capacity to bless the lives of those around you right now. Guys, thank you so much for tuning in, allowing me to create a ripple effect through you in your lives. I know you guys have been binging, you’ve been sharing with others, and man, I love the fact that you guys not just listen to this, you’re not just a listener or hear the word, but you’re do as well.

You’re willing to do something about it. Thank you so much for being a part of this show today. If you guys, if you’re looking for a way to create more passive income, try your passive income calculator right now. See how much passive income you could be creating in the next 12 months. It’s actually a real calculator. It’s taken from my brain using to calculate for your situation. Make sure you put in all your numbers correctly, fill ’em all out, because if you do so, you’ll get an accurate number. Otherwise, I can’t help you there. So go check that out Alright, so I’ve been thinking about what are some of the common mistakes I’m really seeing right now? And again, this is not something I think makes anybody a bad person. It’s just really out of ignorance. It could be out of mis education, misinformation and bad education that’s out there today, usually sometimes by your neighbor, your brother-in-Law, your coworkers or colleagues, whomever it might be.

There’s a lot of bad information out there. And so I want to really hit into this even though this is in the passive income realm, of course, I love, well, there we go. I love passive income for those. You can see me right now. I love passive income. I want to make sure that you guys kind of don’t fall trapped to these common mistakes that I’m seeing happen. And this is actually why even people that have been investing for a while still reach out to us and ask for help because they want that even though they have the basic knowledge, they’re still looking for something to improve upon. So here’s four things you can actually do today. Alright? Number one of the biggest mistakes I see is that people are buying rentals. Now, I know this might be a shock to you. He is like, wait a minute, Chris, don’t you talk about buying rentals a lot in the show or buying real estate?

I do talk a lot about buying real estate, but what I see is a lot of people buying rentals in their backyard, they buy rentals just locally, wherever they might live in their hometown or the town that they’re living in or in that community. And there’s not a bad situation necessarily for doing that because at least you get to have your finger on the pulse. You get to know that the property’s there. It’s real. Although with technology today, you can pretty much verify properties by video zoom, even by Google Maps and everything else. I mean, you can get almost all the information you need from abroad. But the problem is, I see a lot of people is buying it in their local areas. And usually when they buy, they’re not really buying where the numbers are good, they buy a property that they think that they would want, but not necessarily what would actually pay them good money.

And this is true, especially lately, especially if anybody’s in the western half of the United States. IFC this all the time, man, the rentals out here stink. I’m in the western half of the United States. I wouldn’t touch rentals out here. I’m not saying that there aren’t the occasional good ones, but for the vast majority, the rentals stink. I just talked with a client that had been working with us for several months and he did sell one rental and did a great job on it, right? Sold a rental and made some good money and now sees the light. But now there’s another property that should be sold looking at that saying, wait a minute. You’ve got a renter in there, but you could easily triple or quadruple your cashflow right now by not having this property, by selling that investing elsewhere in other markets where you can actually use that equity to make better returns.

And he was like, oh, I don’t know. That’s tough. I was like, I get it. It’s a leap of faith. Your renter’s in there until next fall. Just hang on for the time being. But next fall you should probably be looking at that. As long as the market doesn’t significantly change for the worse, for the better, even more reason. But if it changes for the worse, then no harm no foul. You still have a property that cash flows, but you could do way better. And I see this a lot, right? I’ve seen this time and time again, especially people in California, I’m talking to you west coasters, like places where I grew up that those properties stink, okay? They just flat out stink. But the great thing is you can go buy properties across country. Now, you don’t even have to headhunt them or try to find a realtor in the area and hunt them down for every, because there’s literally hundreds and hundreds of markets you can be investing in the United States.

That’s the beautiful thing about the United States is that it’s so diversified. The bad thing is it’s so diversified. There’s so many areas you could be looking at. And so that’s why we talk about turnkey real estate companies. Like we’ve had guests like Ron Phillips and Heather Marchin with RP Capital, those kinds of things for our 800th episode. Good example right there, because there are some companies that actually do that kind of work for you to help you find the properties and the numbers upfront so that you can actually get into it. So the big mistake I see a lot of people make is they’re buying properties in their own backyard. Alright? Here’s mistake number two. Now this one, I see this happen with those that have already been investing for a while. Sometimes they’re in different investor groups that they’re a part of. Here’s the problem I have when we work with our clients, one-on-one consulting them, we want them to create a very customized personalized game plan, and then we even help connect them with certain investors that have had good track records.

Doesn’t mean anything’s guaranteed, but they actually have a decent track record. So it’s kind of doing some of the vetting or consulting clients. Well, the thing is, when you join a lot of these different groups, and they might be a mastermind of sorts, and I love masterminds, but again, that might be a mastermind or some kind of community investor community and they say, Hey, here you go, have fun. And they might even have their own group of people that you can invest with. But the problem is that, well, okay, there could be a few problems. One is the person that could be promoting these people in the community because they get paid, right? That’s a big one thing I’ve learned from watching other people’s bad experiences that you do not want to be compensated if you’re trying to refer people. If something goes wrong, you get compensated.

Obviously, people are going to come after you. So that’s kind of like a big rule for me is you don’t want compensation, plus you don’t know if their incentives are pure, right? You don’t know if they’re connecting you because it’s the right thing, or they’re connecting you just because they get paid, right? That’s what a financial advisor does. So why would you want to do that? So that’s one problem I have. But then the other problem is that in these communities, they try to invest a little bit of everywhere. They say, you know what? I really like these people. I don’t know which one to invest in, so I’ll just throw spaghetti in the wall, just invest here, here, here, here, here, here, here. And so it’s just haphazardly investing everywhere. They put a little bit with everyone. And again, I get it, you like these people, and even some of my clients will ask me, they’re like, okay, so Chris, all the people you’ve vetted, do you invest with all of them?

Well, no. No, I don’t. Because some of these deals that these people have doesn’t mean they’re bad deals. They just don’t fit either my wife’s and my criteria or they really just, they’re just something that doesn’t fit my goals or my objectives for what I’m trying to achieve. So I’ll invest with several of them, but definitely I’m not going to invest with all of ’em because there’s just different reasons for investing, and some people have different reasons or different preferences, and you shouldn’t copy me no more than I should copy your thing. That’s why it’s a personalized game plan, right? That’s what the whole purpose is. But the problem is when you see people just putting a little bit of money everywhere, although you’re kind of diversified, the problem is it doesn’t matter if you diversify with the wrong people or even worse, you put your money in a place that really doesn’t support your objectives and goals.

For example, if someone says, I want to get to 10,000 a month passive income as quickly as they can, okay, cool. Well, why’d you invest in this growth type of investment instead? One that doesn’t even give you cashflow or gives you very little cashflow. If you want cashflow now, you should be getting more cashflowing investments to fit that objective versus something that might say, Hey, in three to five years or even six or seven years, then you’ll get paid. Now, yeah, sure, that could be future cashflow because then you get paid. If you get a good enough return, you can take that money and invest in something that cash flows. But if you want cashflow today, don’t lock your money in a way in something that’s going to be just only growth. That’s not going to create any cashflow. And I’ve seen people come to us that that’s the problem.

They say, Chris, I’ve actually been investing in this stuff, but the problem is is that I’m not really making any money month to month or quarter to quarter because these are all someday investments. And again, they just did it because they sounded good. Maybe they’re on somebody else’s podcast and they said, I’m going to invest with them. Maybe they’re on my podcast and maybe I wouldn’t even recommend them. But again, I had somebody with an interesting story and you would look them up and you realize they had funds or some investment you decided to go with that. I may not have suggested that, well, I’m not going to suggest you to buy or sell anything anyways, but just for the fact that I may not be promoting them because I may not trust that they would have the right kind of experience, the kind of things that I would want to gamble my money in.

So again, don’t spread your money among all these different people trying to put in all these different types of investments, maybe 25, $50,000 at a time. Instead, it’s better to not diversify as much. You can be diversified, but invest with less people. It’s easier to manage, especially if you have a spouse who’s not as involved with it. They will thank you for this. If you ever, for whatever reason, hopefully heaven forbid you pass away or something happens where they have to take over things, they will thank you if you don’t have an overly complex, overly diversified type of portfolio. So again, don’t just throw your money at every little thing here and there haphazardly. We don’t want you to do that. Number three, this one’s a big one, and I see this happen all the time, is do not invest with amateurs. Now, I get it.

Maybe you have a family member that you want to help them out, you trust them. But I see the same thing, although I would want to help out a good friend or a family member. I’ll just tell you the same thing I told one of my friends when they approached me with the deal, this one person approached me with the deal that dealt with technology in the oil and gas space, and this guy’s a great guy, don’t get me wrong. He’s awesome. He’s been a client of mine, but he said, Hey, I’m going to this new venture right now and this is going to pay sick amounts of money, like great cashflow, like 2% a month or more, and that sounds amazing, right? To make 20% plus a year sounds awesome. However, this guy had no experience in that field, at least not a decades plus worth of experience for sure.

And so I said, that sounds exciting. One, I don’t invest in tech. That’s kind of a general rule I have for myself. And then number two, give me a call in maybe a decade or so after you’ve done this, kind of experimented with it a little bit and tried some things out and got a good system. Then maybe I’ll look at it again. And guys, I’m serious when I say that I don’t want somebody to just come off the street. I don’t care how amazing they are, and I have some friends that have been in real estate maybe in the last five years or so, but I don’t want to gamble my money with them. Why would I want to recommend people that follow me to gamble and put their money with them? Again, it doesn’t mean that they’re bad. It doesn’t mean that you’ll even lose money with them, but I know that the thing is, I want somebody who has experience or they’ve gone through at least one full good market cycle, meaning they’ve been through at least one recession and boom times.

So they’ve been through boom times and bust times. They’ve seen the ups, they’ve seen the downs, they’ve learned from it. They probably bumped their knees a few times on that and bruised themselves and maybe came out bloody and toothless a little bit, but they still came on the other side more wise and really wiser and knowing what they can do with that and how they can adapt when markets change. Those are the kind of people I like to invest with. People that just came on the scene and say they came and seen in 2017 or 2018, sorry, as great as you are, I want to invest with people that have been around since at least 2010. Those are the kind of people I like to invest with. So just be aware. Many, many times I see people that will just invest in some strategy or some investment.

It sounds great. The numbers all look good. It’s all pretty and polished when they send you that pro forma, for example, with all the returns and how the deal’s going to be so amazing and how they’re going to make money on it. But at the end of the day, it’s always about the person they are. The first thing you’re investing in is the person, the operator, who’s actually doing the investing. Secondarily, it’s the investment. I always go with the operator or the investor first. That is the one you have to question. That is who you have to really do a lot of due diligence on first. Then you look at the investment. It is possible. It could be somebody who’s very experienced, but then they decide to do an investment because they’re just trying to find some deals to make money on. They get desperate, they violate their own rules and doesn’t work out.

Don’t do that. That’s not a good idea. I recommend against those kinds of things, but I do recommend, I do definitely recommend that you invest with people that have experience, that have great track records. And like I said, I like people that have been investing since at least 2010 or earlier in that specific space. So if they were investing in apartments and all of a sudden they switched to invest in marijuana farms, I wouldn’t do it. So if they changed, they pivot into a completely different business model. I wouldn’t do it if they went from residential real estate and all of a sudden now they’re doing assisted living or self storage, I’d be like, well, get some experience. First, be Guinea pig with your own money. Don’t use my money. That’s my 2 cents on that. So that’s number three. So number one, you’re buying rentals in your area, right?

You’re just buying rentals haphazardly. Number two is you invest a little bit of money everywhere with anybody or everybody. And then number three is that you’re going with people that are amateurs. Don’t invest with amateurs. Number four, and this one, even if you haven’t been investing, this could be your situation. You could be a business owner that’s never invested in real estate, and this could be your case, and it’s simply this. Your finances are not working together. Your finances are not working together. What does that mean? Well, that means, for example, maybe you have a good CPA, but the attorney would disagree with the CPA or maybe the investment advisor have disagrees with the CPA or the attorney, and so nobody’s on the same page, and so as a result, you kind of look at your financial portfolio as individual pieces, right? You look at it, you say, well, yeah, I’ve got insurance over here.

Yeah, I’ve got my investments over here. I’ve got my savings over there. I’ve got my estate planning over here. I’ve got my taxes over here. I’ve my business or my income over here, and you kind of keep it all separate. You kind of keep it compartmentalized, like a male type of thinking. But the problem is that when they don’t work together, money is lost. Instead of having these cogs of the wheel, they don’t really connect. You need ’em to connect together. So what does that look like? Well, that looks like is that you have a very intentional plan. One, you know what you want. That’s key, right? You got to know what you want. What are your goals and objectives? But then two, you got to make sure that the team is all on board. This is why when people say, I don’t know what to do about my financial advisor because I like ’em and I know they want me to succeed, but I mean, I just dunno if they have my best interest at heart, but again, I don’t know how to break it to ’em that I want to pull money out of the market.

Hello, it’s your money. You are the boss, not them. You boss them around. You boss your own money around. Now you have to boss it around. I don’t want send out that energy for those that are very highly sensitive energy people, but you are in command of your own money and your own life. You are the boss. They work for you, right? That’s why I tell people, even when they hire us as consultants, we work for them. We work for the client, not for the people they’re investing with. We’re not trying to be brokers or prostituting ourselves out there. No, we’re working for the client. We’re in their corner, and that’s the way it should be with everybody on your team and your finances should work that way. This is why so many people are confused about infinite banking. They’re like, wait a minute, I’m going to use whole life insurance, but I’m going to use it with investing.

I’m not going to use it for I buying a house or a car. They always say on those videos or I’m not going to use it to supplement my retirement. Well, those are all options, but no, no, because we could do so much better outside of that box, little minded way of thinking that all those insurance agents have because they’re insurance agents. They’re not investors. They’re got tiny, little, tiny little thinking, tiny little boxes that they’re living in. You don’t want to be in that world. You want to open it up and say, how does this all work together as a plan? Heck, even just having a savings account, you realize having an emergency fund actually increases the ROI of your investments. Why? Why? Because when you have a bigger emergency fund, so you have six months emergency fund in place, what can you do?

Well, one, you’re not worried about gambling too much of your life away, so when you do invest, you’re willing to take a little bit more risk with it. Not a lot. I don’t like risk. I’m very risk averse. Actually, I’m more conservative than probably most of the people listening to this show right now because I don’t like the stock market. I don’t like to gamble my money. That’s why I stay away from that stuff. I like to go with certainty as much as I can get, but when you don’t have any reserves, you realize like, oh, well, I can invest it, but I got to invest in a place that I can pull it right back out again, so you’re probably not going to make as much money because they got to pull it right back out, so I’m going to lose returns there. On top of that, even if you didn’t do any investing, the fact that you have insurances, homeowner’s insurance, auto insurance, your health insurance, or even disability insurances, you can raise all your deductibles because you have a savings account there that can cover those deductibles.

Even for disability insurance, if you say, Hey, I’m going to do 180 day period, an elimination period before, of course, another month after that when it kicks in, but I got over six months of reserves so I can increase, I can actually decrease my premiums because I can now increase that elimination period time, which is like your deductible, your auto insurance deductible by increasing the deductibles, what happens? Costs go down, premiums go down. If that saves you even $5,000 a year and your emergency fund is a hundred thousand bucks, guess what? You just made a 5% return without investing a dime. That’s what it means. That’s that’s the true way of making your finances work together. That’s why we teach that stuff. It’s not just about investing for passive income, although that’s awesome too, but it’s about making it all work together as seamlessly as possible so that as a cohesive unit working in unison, those cogs work together, you get the best efficiency you can get.

That’s the purpose, and so what happens is most people usually just haphazardly, just kind of invest a little here, a little there, not real memories, just hoping that they throw spaghetti on the wall and it sticks, right? They just hope that something wins big. They don’t know what it’s going to be, but we’ll just try this out. We’ll try that out. Stop it. Be intentional. Be focused. If that means you need to get some help, then great, you can get some help. It doesn’t have to be us. It could be somebody else, but find some guidance there so that you stop getting distracted by all these things that actually take money away. You lose opportunity costs. You either just leak money because you’re paying too much for stuff and or two, you end up not making more money than you should be, so stop buying rentals in your backyard.

Stop throwing your money a little bit at everybody just to try something out, right? Stop investing with amateurs that could easily lose your money, and of course, make sure that all your things work together in your finances so that you get the best results possible because time, it’s not money, guys. Time is not money. Time is literally your life back in your hands. You never know how much time we have this planet. I don’t know how much time I have in this planet. All we know is we have today, and even that might be limited depending on what’s happening. Heaven forbid, today’s your last day, right? But we never know how much time we have on this planet. What are you going to do at that time? Every day you waste trying to do these things and maybe you’re trying to DIY it, or maybe just listening to a crappy advice out there that is hurting you.

You cannot afford to lose a single day. You really can’t. Every day counts. Every day counts, especially when it comes to you, your family, and your dreams and your goals and your ambitions and your purpose of what you’re here to do on this planet to create a ripple effect through people’s lives. That is why I’m so serious about this. This is why I can’t emphasize this enough, so avoid those common mistakes. I’m not saying this is the all inclusive lifts, but these are the big ones that I see commonly with a lot of people. Even those with experience in investing still fall trapped to these little mistakes. Guys, stop it today. Again, don’t just be a hero of this show, but be a doer as well. Go and make it a wonderful and prosperous week. We’ll see you later. This one’s a big one, and I see this happen all the time, is do not invest with amateurs. I want somebody who has experience where they’ve gone through at least one full good market cycle, meaning they’ve been through at least one recession and boom times, so they’ve been through boom times and bust times, right? Those are the kind of people I like to invest with. People that just came on the scene and say they came and seen in 2017 or 2018, sorry, as great as you are, I want to invest with people that have been around since at least 2010.