Best foot forward (The Financial Athlete #107)

The first 5 minutes in the 1st Quarter and the last 5 minutes of the 4th Quarter of a basketball game are my favorite segments to watch. Obviously, the last 5 minutes of the 4th Quarter are more critical since this determines the winner of the game. However, in the first 5 minutes of the game we get a sense of who is hungrier to win. These starting moments of the game show the importance of putting “our best foot forward”.

What does it mean for an investor to put his best foot forward? It means to pass up on many investing opportunities until you are very satisfied with your choice predicated on thorough due diligence. Before I purchased my first home, I had viewed over one hundred other houses. I was not prepared to buy a home until it met my three criteria: Do I love this home to live in? Can I get a good return if I rent it? Does the home have many desirable features, making it easier to sell?

Some investors are too eager to trade cash for tangible assets or securities. Cash should not be perceived as a “hot potato” except in a time of hyperinflation. For an investor who fears inflation, he would be better off to set aside a substantial portion of his cash into TIPS (Treasury Inflation Protection Securities), instead of hastily investing that money in securities or real estate.

Always move with your best foot forward, or you may find yourself stumbling.

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