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Portfolio Balance Through Diversification

In my opinion, every individual should be responsible for overseeing their investment portfolio. Each person needs to determine their goals and figure out what investments are best for them to achieve their goals. All of us are in different phases of life, so figuring out if you need more cash flow today or less cash flow today with more upside in the future is an important personal decision.

In addition, fine-tuning your strategy to have a balanced portfolio with short- and long-term investments is a good idea. A short-term investment will provide quicker access to your capital. A long-term investment ties up your capital for a longer term, but, typically, offers a higher return. In a previous article, I shared some insights and advice from Warren Buffett and Jim Clayton from a book I read. Here is a quick review of the book’s insights:

First a Dream

First a Dream, written by Bill Retherford and Jim Clayton, is a fantastic book about Jim Clayton, who grew up working in tough farming conditions. As a young kid, Jim worked and lived with his parents and brother in a single-room home without plumbing. There were cracks in the flooring that looked straight to the dirt below, which allowed cold winter air or hot humid summer air to flow freely onto the floor on which they slept. Jim’s personal story is very interesting, and the journey of his company, Clayton Homes, is wonderful.

In 2003, Jim and his Clayton Homes public company decided to sell to Warren Buffett for $1.7 billion  and become part of the Berkshire Hathaway family of companies. Jim talks about having a balanced portfolio without needing to diversify into many industries.

Jim’s philosophy and Warren’s philosophy are fairly similar in that they don’t believe in making investments into industries or companies that they don’t understand how the business operates. They don’t believe in the wide net investment diversification approach that Wall Street and bankers try to sell.

Another major takeaway is they believe a balanced portfolio comprises short-term and long-term investments that meet the individual’s goals and needs. Both Jim and Warren, aside from having balanced portfolios, also believe strongly in the power of compound interest, where the interest is calculated based on both the initial principal and the accumulated interest from previous periods.

Our Diversification Approach

When we first got started, we focused solely on multifamily investment options. As our company has grown and evolved over the years, we’ve pursued initiatives to provide more investment options to you so you can diversify your portfolio. Most recently, we’ve launched two new investment options:

The Real Estate Debt Fund

The real estate debt fund is set up to be a place for investors to place capital, so it can earn a return and you can get access to your capital if you need it back quickly. The debt fund allows you to get your capital back in about 90 days compared to capital being tied up for 5 to 7 years in a multifamily or self-storage investment.

The Self-Storage Fund

The self-storage fund is set up to be a place for investors to place capital for a longer term that is diversified across many properties. The fund currently owns a couple of self-storage properties and is continuing to acquire more properties. This allows investor capital to be diversified across every property the fund owns, so investor capital has extra security and can receive benefits from all fund-owned properties.

Conclusion

If you have questions about either of the new investment fund opportunities, do not hesitate to reach out to me or someone from our team. We will continue to present you with investment options that will assist you in building a solid financial infrastructure for both today and down the road.