To Be a Millionaire, Don't Park and Pray

Real estate is one of my favorite types of direct investments. But there are several other opportunities out there, such as private-equity ventures involving new products or private businesses -- any venture that does not have its equity or debt available on the public markets. I mentioned oil and gas earlier.

As I said, I don't own the stocks but the wells themselves. My team in this asset class is richly diversified so I have the opportunity to make strong returns while managing my risk through the use of smart, experienced teams. Then there are the alternative investments, such as promissory notes and truly self-directed IRAs. Once you start thinking differently about how you invest, you will start scoping out new opportunities constantly and actually discover some.

Let's address one question I am often asked: "What about risk?" In Wealth Cycle Investing, risk is mitigated in several ways. The two most important are building your team and doing your due diligence.

I keep hammering away at this team concept. Building a team and leading it are critical to all aspects of your Wealth Cycle, especially when it comes to risk. Having a team reduces risk. Work with others whom you trust and who have experience and knowledge about the investments you are considering. Collective knowledge and experience lowers risk and accelerates diversification. My investments are well diversified both across asset classes and through diverse investments within each asset class.

Make sure you do your due diligence before investing. Kick the tires. Ask the questions. Check under the hood. Whatever the metaphor, learn as much as you can, because knowledge reduces risk. And again, team. Put the lawyers, financial analysts and accountants on your team to work verifying the details in any deal.

And one more thing on risk. Think about this: Are you better off owning assets, being involved in the operations and knowing what's going on, or parking your money with a broker who probably knows little, beyond the numbers, about the companies behind the stocks? Me? I'll take getting down and dirty any day and knowing I control my money.

Before you begin direct investments, you will need to determine your Money Rules, as I call them. Everyone will have different Money Rules, based upon their own financial situation and objectives, their risk tolerance and their needs for cash flow or appreciation. Once you know where you are and where you want to go, these Money Rules will inform your investment decisions and be the compass that keeps you on track.

Wealth Cycle Investing is not a new approach. Millionaires have been doing it for generations. Now you, too, can invest directly in specific cash-generating and appreciating assets. You will be amazed at how many doors are open to you for direct investments. Not only is this approach exciting and rewarding, but you will be more in control of your financial future than you ever thought possible. And remember: Anyone can do it.

In the meantime, here's to your wealth.

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