In times of uncertainty and chaos fortunes are made. Warren Buffett says, “Buy when there’s blood in the streets.” But how do you know what you should buy? How do you sort through the myriad investment options to decide which investment is right for you? The answer is surprisingly simple…

A plan. Without a plan you will find yourself (as I did) chasing every “new shiny object”. You become “a mile wide and an inch deep”. A plan will allow you to quickly categorize which investment opportunities are ideal and eliminate the options that “seem” profitable but won’t work for you.

What kind of plan am I talking about? A wealth strategy. Your wealth strategy should have three pieces; (1) where you are today, (2) where you want to go and (3) what your role is going to be (similar methodology is used to determine your freedom fund). It truly is that simple.

Warren Buffett, Robert Kiyosaki and the other great investors don’t just purely look at numbers in a spread sheet when they are purchasing a property or business. They look at the prospect in its current state and have a bunch of really smart people tell them where the business, industry or property is going, how much capital it will need, the amount of resources needed, and most importantly what their role will be in the process.

If the prospect doesn’t fit the great investor’s wealth strategy, no matter how profitable, they move on. This is difficult for us mortals. I have found myself many times jumping into an investment that looked great on paper without really understanding how this opportunity fit into my overall portfolio and strategy, which is a big mistake.

So, let’s dive into each component of the wealth strategy. You may hear various gurus and financial planners talk about these three aspects – and they are essential to your success.

Where you are today

What do your finances currently look like? You should know;

• Income – how much money you make a month/year.

• Expenses – how much money you spend on a monthly/annual basis.

• Taxes – how many Benjamins are you giving to Uncle Sam.

• Assets – anything that you own with monetary value (house, car, IRAs, 401k, expensive furniture, etc.).

• Liabilities – money that you owe (student loans, loan on your car or furniture, mortgage, etc.).

• Net Worth – the amount of cash you would have if you sold all your assets and paid off all your debts (assets minus liabilities).

It’s important to understand each category. You can’t know where you’re going if you don’t know where you are.

For example; a person with a large tax burden is going to invest differently than a person with a smaller one, a person with a lot of debt is going to invest differently than a person with no debt, and so on…

Where you want to go

What is your ideal life like? How do you want to spend your time? How much do you want to give? What kind of car do you want to drive?

These are just a few questions you need to ask yourself to uncover your ultimate lifestyle. The more specific you are, the more likely you are to obtain your goal. Try to dig deep and determine what you really want. And remember, your end goal isn’t set in stone. If you find yourself drifting from where you want to be then do some self-reflecting and change your goal (just don’t change your plan like you change your undies!).

Your role

Do you want to be actively involved with your investments or do you want passive income? This filter may be the most important of all. We all are limited to 24 hours in a day, how you spend it is up to you. If you want more family time, running a business probably isn’t the best fit. Conversely, if you want to be actively involved in your investments then some of the passive income strategies may not be appropriate.

At the end of the day, what these questions try to do is assist you in compiling your thoughts into a road map. Once you have an accurate road map you can easily determine if an investment fits your wealth strategy.

Your investments should serve you, not the other way around.

Develop a plan and stay the course, especially in volatile times.

- Cam