How do you invest your profit?

Question

Hey folks!

We are working on our business plan for growth this year and one area I haven’t been able to find any info on is how people are reinvesting their profits. We have just closed on our first property that we will flip and I want to have a very clear plan of what to do with profits before they show up. The intent is to take away any impulse use of the money. Not counting chicks before they hatch but having a plan if they hatch. So I landed on splitting the after tax money as follows: 10% into marketing / lead generation, 50% into growing the liquid investment fund, 15% into debt reduction, 25% into personal disbursements. Thoughts?

Doug Smith · Answer

During my banking career, I was a Private Banker for a while where I worked with affluent clientele on their loans, investing, and financial plans. I can tell you from that experience that one size does not fit all. The main thing is to have a plan and it looks like you have one. Kudos!

I know I'm a lender, but we are also investors ourselves and when we first started, we were rolling all of the profits over into new projects. We found however, that it was better for us to take a little here and there. What is right for me might not be right for you, but I like your plan. Remember to look into 1031 exchanges to hopefully avoid some taxation, but I would suggest speaking with your CPA about that. Good luck in your investing journey.