This didn\u2019t work out too well. He didn\u2019t hit the number of home runs he hoped to, and his batting average sunk to dismal depths.<\/p>\n
Of the thousands of baseball players who came up from sandlots to the Big Leagues, this strategy has worked for some.<\/p>\n
- \n
- Babe Ruth<\/li>\n
- Hank Aaron<\/li>\n
- Barry Bonds<\/li>\n<\/ul>\n
But these names stand out because they are the exceptions. It\u2019s well known that Babe Ruth was also well known for striking out. He had almost twice as many strikeouts as home runs in his 22-year career.<\/p>\n
When I talk about swinging for the fences, I am talking about taking big risks. Giving it all you\u2019ve got. Investing every ounce of your resources into the highest or most dramatic possible outcome.<\/p>\n
Should you swing for the fences? Well, it depends.<\/p>\n
It depends on the situation. There are times when I love swinging for the fences. In fact, I think it\u2019s mandatory if you want the most out of life.<\/p>\n
There are other times when I think it\u2019s disastrous\u2014specifically when it comes to investing.<\/p>\n
When Should You Swing for the Fences?<\/h2>\n
Like I said, there are times when it\u2019s critical if you want to live the life you were designed to live. Here are a few examples.<\/p>\n
Following Your Dreams<\/h3>\n
The Daily Positive<\/a> <\/em>reports on a recent study performed by terminal care nurse Bronnie Ware. Bronnie says the number one regret of the dying was that they didn\u2019t pursue their dreams and aspirations. Rather, they settled for what others expected of them.<\/p>\n
These people wish they had swung for the fences. But it was too late.<\/p>\n
Are you suffering from analysis paralysis and stalling on that first real estate purchase? Are you dreaming of quitting that nine-to-five but are too scared to make the leap?<\/p>\n
Maybe it\u2019s time to swing away.<\/em><\/p>\n
Loving Others<\/h3>\n
I love \u201ctaking risks\u201d with people in public\u2014to show people that someone cares. I engage in conversation with strangers. I encourage people who look depressed. I offer to pray for people who are sick. I give away two-dollar bills to kids.<\/p>\n
It\u2019s a lot of fun to swing wholeheartedly when it comes to people. And it makes for a lot of memorable (and a few awkward!) situations.<\/p>\n
I believe we were created to receive love and to love others\u2014even strangers, co-workers, and enemies. And like I tell my kids that shyness is no excuse.<\/p>\n
Are you holding your cards close to the vest? Playing it safe? Protecting yourself from pain?<\/p>\n
I can confidently say it\u2019s time for you to take a swing<\/em>.<\/p>\n
![\"\"](\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2016\/11\/real-life-experience.jpg\" "\\"\\"")
<\/p>\nRelated:<\/strong> 4 Ways Technology is Shaking Up Commercial Real Estate (& Why Multifamily Will Pull Ahead)<\/a><\/em><\/p>\n
Being There for Family<\/h3>\n
It may have been the late Senator Paul Tsongas who first said, \u201cNo one on their deathbed says, \u2018I wish I had spent more time at the office.\u2019\u201d<\/p>\n
If you\u2019re married or have children, it may not seem that investing more time with them classifies as swinging for the fences. In fact, to be honest, the time needed there has sometimes seemed to be the very thing holding me back from swinging.<\/p>\n
But you know the truth in your heart. Most spouses and children need more of us than we are giving them. There are obviously seasons where we are running hard to get a new project or company off the ground. But those seasons shouldn\u2019t last forever. No matter how tempting or fun that seems.<\/p>\n
We were made for relationships, and we will find deeper meaning and fulfillment there than any amount of success and financial reward could bring. The evidence is in the shattered lives and families of many successful people. We have all seen them.<\/p>\n
Are you tempted to put business or hobbies or sports or TV ahead of the people you should be loving the most?<\/p>\n
Then it\u2019s definitely time for you to take a swing for the fences. <\/em><\/p>\n
And When Should You Refrain From Taking That Big Swing?\u00a0<\/strong><\/h2>\n
“It’s not how much money you make, but how much money you keep, how hard it works for you, and how many generations you keep it for.” \u2014Robert Kiyosaki, Author of\u00a0Rich Dad Poor Dad<\/a><\/em><\/p><\/blockquote>\n
If you’re a millionaire by the time you’re 40, but blow it all by age 50, you’ve gained nothing, except the opportunity to start all over again.<\/p>\n
Investing Your Money<\/h3>\n
Are you still swinging for the fences with your investments?<\/p>\n
I hope not. But if you are, let me encourage you to stop. Right now. Whether you\u2019re 22 or 82, it is not a workable long-term strategy. It wasn\u2019t for me, and it won\u2019t be for you either.<\/p>\n
Sure, there are rare people who defy the odds and make it big. And many investors hit it out of the park once\u2014but they get the taste for a repeat, which often eludes them the rest of their life.\u00a0<\/strong><\/p>\n
There comes a time in many investors\u2019 lives when swinging for the fences is no longer fun or profitable, when the elusive glitter is seen for the illusion that it really is.<\/p>\n
Like I said earlier, stories of those hitting grand slams abound, but there is a reason they\u2019re told repeatedly.<\/p>\n
Because they are the exceptions<\/em>.<\/p>\n
For each of these stories, there are dozens who have swung away and caught nothing but air. They\u00a0were left rebuilding for years to get back to where they were when they took that crazy plunge. Which story do you think will be told in blogs and bars and real estate investing clubs?<\/p>\n
a.) Johnny bought a home for 45 cents on the dollar, then while renovating found out it could be rezoned commercially. He went on to sell it for four times what he paid!<\/p>\n
OR<\/p>\n
b.) Gary and his son began quietly buying apartment buildings. For years, they faithfully built this business. They never made a fortune in any one year, but over time, they became one of the wealthiest families in town.<\/p>\n
By the way, Johnny\u2019s 300 percent profit story didn\u2019t include the slam dunk deal that went south or the quick flip that turned into a slow nightmare, landing him a job delivering pizzas for Domino\u2019s \u2018til he got back on his feet.<\/p>\n
The Law of Risk and Return<\/h2>\n
This is elementary, but it\u2019s worth underscoring here.<\/p>\n
Risk is proportional to potential return\u2014a<\/em>t least in the age in which we live and the planet we inhabit. Look at the odds on the lottery ticket, the \u201cbeta\u201d on stocks, or the published success rate of making a million in multi-level marketing.<\/p>\n
I don\u2019t think I can top these four paragraphs and graph from Investopedia<\/a>:<\/p>\n
\u201cThe risk\/return tradeoff could easily be called the \u2018ability-to-sleep-at-night test.\u2019 While some people can handle the equivalent of financial skydiving without batting an eye, others are terrified to climb the financial ladder without a secure harness. Deciding what amount of risk you can take while remaining comfortable with your investments is very important.<\/p>\n
In the investing world, the dictionary definition of risk is the chance that an investment’s actual return will be different than expected. Technically, this is measured in statistics by standard deviation. Risk means you have the possibility of losing some, or even all, of your original investment.<\/p>\n
Low levels of uncertainty (low risk) are associated with low potential returns. High levels of uncertainty (high risk) are associated with high potential returns. The risk\/return tradeoff is the balance between the desire for the lowest possible risk and the highest possible return. This is demonstrated graphically in the chart below. A higher standard deviation means a higher risk and higher possible return.\u201d<\/p>\n
A common misconception is that higher risk equals greater return. The risk\/return tradeoff tells us that the higher risk gives us the\u00a0possibility\u00a0of higher returns. There are no guarantees. Just as risk means higher potential returns, it also means higher potential losses.\u201d<\/p><\/blockquote>\n
Did you catch that? \u201cThe risk\/return tradeoff tells us that the higher risk gives us the\u00a0possibility<\/em>\u00a0of higher returns.\u201d<\/p>\n
![\"tenant-screening-tips\"](\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2016\/11\/tenant-screening-tips.jpg\" "\\"\\"")
<\/p>\nDon\u2019t Roll the Dice With Your Investment Funds<\/h2>\n
If you treat investing like gambling, you will likely not retain your wealth long. Investment advisors typically advise their clients to allocate no more than about 10 percent of their funds to high-risk equities. This should be money you can afford to lose. As one advisor told me, \u201cDon\u2019t allocate any funds to high-risk ventures that you won’t miss if alternatively used as kindling in your fireplace.\u201d<\/p>\n
If you roll the dice with 50 or even 100 percent of your investible capital, and win, what about next time? And the following? This is simply not a sustainable strategy for 99 percent of the population and not one that lends itself to commercial real estate investing. If that is your strategy, perhaps you should stop reading this article and go bet on horses.<\/p>\n
In my first venture into commercial real estate, in the 90s, I invested with my partner who built a beautiful office building in a great location in Colorado Springs. Though it finished out nicer than expected, faster than planned, and under budget (even building through a Colorado winter and dealing with environmentalists over a rare breed of endangered mouse and 53-foot deep concrete piers) we opened our doors not long before the 2000 downturn\u2014something we could not have anticipated or controlled.
\n
\nRelated:<\/strong> Why the Wealthy Put Their Money Into Multifamily & Commercial Real Estate<\/a><\/em><\/p>\nThe profitability on that venture never approached what we planned. The project barely survived the first several years. We made it through a very lean time, but here\u2019s the point: This high-risk\/high potential <\/em>return project was another example of the boom and bust mentality of a developer.<\/p>\n
If you want to invest that way, I hope it works out well for you. Many developers are among the world\u2019s wealthiest individuals. But I believe that many<\/em> more have ended in shambles, losing their wealth, their health and sadly, sometimes, their reputations and families.<\/p>\n
It\u2019s important to get this straight. High risk does not lead to high return. It leads to high potential<\/em> return. And equally true that it leads to high potential<\/em> loss.<\/p>\n
After years of hard knocks and lessons, I recommend that you consider investing carefully and not gambling with your assets.<\/p>\n
Like I said in a previous article<\/a>, it is critical that you know the difference between investing and speculating. Hopefully you do. And hopefully you’re investing.<\/p>\n
“Investing should be more like watching paint dry or watching grass grow. If you want excitement, take $800 and go to Las Vegas.” \u2014Paul Samuelson,\u00a0First American Winner of Nobel Prize in Economic Sciences<\/p><\/blockquote>\n
Think about it\u2014if you continue to play double or nothing, you may win a few times. But you will eventually land on nothing. And then what will you have left to play with next time around? You can do the math on that.<\/p>\n
Bears prosper in some markets. Bulls prosper in other markets. But sooner or later, pigs will be consumed. I don\u2019t want to see this happen to you.<\/p>\n
For the Long Haul\u00a0<\/strong><\/h2>\n
I have heard of dozens of ways to invest in real estate, and I\u2019ve been involved in close to a dozen myself. I\u2019ve made money flipping homes<\/a> and lots, in rental homes, lease options and more. After a lot of research, study, and observation, I made a decision to follow a new path several years ago.<\/p>\n
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