Proactive versus Reactive Investing

When it comes to your financial investments, do you consider yourself to be proactive, reactive or maybe more complacent? This may have a lot to do with the type of investing you are involved in, but whatever type of investing, people handle their money and plans for their financial future differently.

There are a lot of investors that are very hands on. They considerate it to be part of their job to manage their financial investments day to day. Especially with bigger sums of money, they seek to find the best investments with the highest yields, which can make a huge difference on returns - each day. Say they have made a loan that was paid off and they now have $150,000. They will try to reinvest this quickly. For example, if on their previous note and trust deed investment they were getting approximately $49 a day in interest (12% with interest only payments), they won't want to lose out on that interest each day and will want to either have a new investment opportunity lined up or will be motivated to find another one. Especially when banks are paying only a tiny fraction on the money that sits in a savings or money market account.

On the opposite side of the investing spectrum are those who maybe have a mutual fund account and have chunked some money into it at one time, but they don't think much about it and just let it sit and hope it continues to build slowly. Or maybe the real opposite to the hands-on investor is a person who has no savings or plans for their financial future. Where ever you fall on the spectrum, if you are not happy with your position, you can make changes.

* Contributing an extra $100 (or more) a month - or even a smaller portion - to your savings plan is a proactive way to help build your wealth. It may start out small, but it can grow. Plus it sets up a good habit or routine. Hopefully it may start with a $100 contribution monthly but grow in time to a large amount being added to the savings.

* Establish and maintain a budget. This is a proactive way to shape your financial future. Don't forget to always have an emergency fund. So many people get in trouble when some unexpected large expense comes up that they hadn't been prepared for.

* Try to keep some diversification in your portfolio. There definitely is some risk when you put all your eggs in one basket. Say you have invested everything in a business and it goes South. If you have other investments that are performing it can help to keep you afloat. Even in note and trust deed investing, it is a good idea to diversify. Instead of putting all your money into one $150,000 note and trust deed, maybe you could split it up and do 2 or 3 private money loans.

* Try not to be too reactive. The DOW could be going South one day but jump up the next. Having defined goals will help you know whether you need to be looking at things in terms of the next couple of years or the next ten years.

* Keep up-to-date on new opportunities, tax advantages for different types of savings and market conditions - the bottom line is to continually educate yourself and maintain an awareness that could not only help protect you today, but for the future.