Hey Guys. I need to talk to you about “Lost Opportunity Cost”. If you’ve already got an investment in shares, property, business or a combination of both, you really have to listen to this message. It is critical to your success in the investing world.
So what is lost opportunity cost? For a lot of you out there and this is the fact. 90% of investments, so that’s 9 out of 10 investments are made by an individual or by an entity and then forgotten about. Ok, here me now.
That means that people have gone in and made and investment and then have kind of just forgotten about it in any detail. They just put it to one side and hoping that magically, they’re going to get an email or a cheque is going to land in their letter box.
Lost opportunity cost is about not understanding how you can optimise the opportunity that you have and you lose or you miss out on future opportunities.
And this is commonplace where you’ve gone and bought an investment. It could be a share portfolio, you could have one or two real estate investments, it could be some bonds, it could be a term deposit. It could be a business that you are not directly involved with and what happens is you just put it on the back burner.
You are thinking to yourself – “You know what? It’s just sitting there. It’s not causing me any problems. And it’s not having a real negative impact on my lifestyle. So I’ll let it go and just let it do its thing.”
OMG!!!
There are opportunities that you are missing out on and it’s because you’re not tracking your investments. It’s because you’re not measuring what’s happening with your investment. Do not be the 9 out of 10 investors who take on something, and it could be something as simple as some bonds or a term deposit, it could be a piece of real estate where you believe that:
“As long as it’s not costing me anything. It’s OK”
Here’s the rub people –
Whether it is costing you or not is irrelevant – If it’s not making you anything – get rid of it!!
How do you know if your investment is not costing you anything. Because if you know whether or not it is costing you – then you should know whether or your investment is benefitting you.
Unless you know whether it is growing in value or unless you know whether the ROI is increasing, it is a wasted investment. And you may as well take all your cash out and put it in a shoebox and stick it under your bed. Ok.
Inflation will probably do better than some of the investments that some of you guys have on the go. So it’s something that I’m going to speak a lot about over the coming weeks.
One of the absolute key problems that current investors face is they go and invest in stuff and don’t properly track or measure the performance of that investment. And then when it’s not working are too scared to change anything.
Now Imagine this. You have an investment – but question it’s validity. You are unsure whether you should keep it or move it on. If you cannot decide – it’s either because you are too emotionally attached to the asset OR you have some limiting money beliefs that are blocking your ‘good judgement’ skills.
So Imagine that one night – whilst you are sleeping – your investment in question was replaced with a pile of dollar bills on the floor of your bedroom. To the amount that your investment is worth on the current market. So if you had some shares with $55,000 – instead of the shares you now have a pile of dollar bills worth $55,000.
You wake up. Now!! You get to make this decision. Do you:
- Buy the investment you originally had for the amount of money sitting on your floor. Because you’ve weighed up all your options and you believe that – yes, it IS what you need.
- You realise that the money on your floor can be used for a better or different investment.
This little mental activity is a wonderful way for you to remove yourself from the situation and make a rational decision as if you are ‘starting from scratch’.
So make sure that you understand about lost opportunity cost. And have you seen the updated FREE Training Videos yet??
It will cost you nothing other than your time. Or even just drop me and email and say “Duncan I’ve got these assets, it’s kind of doing this, do you think I should keep it? What do you suggest is happening in the world? “And I give you whatever options I can. So crew take it easy.