And just like that, another new year has begun. If you are like most people, you are starting the year with a renewed sense of optimism and are setting goals for a better future. It’s likely some of those goals involve improving your finances. 

Perhaps you’ve decided – this is the year you will finally start to take action as an investor. Or for some, you want to take your current investing to the next level this year. 

Listen, if you are expecting me to applaud you and tell you to immediately go for it, well not so fast. I want to suggest an important Rich Dad mindset you should adopt before taking action. 

Maybe you’ve already decided what asset class you are interested in, and that is a great first step. But before taking action, you need to decide how you will invest in your chosen asset class. Your decision will not only influence your specific investment decisions, but also direct your educational pursuits. 

For example, when it comes to investing in real estate, there are two main types of approaches you can choose to follow. One is investing for capital gains and the other is investing for cash flow. 

Investing for capital gains is tempting, but you are hoping the value of the property will increase. If it happens, you may see a profit from the investment. However, if the property value does not increase, things can turn negative for you in a hurry. Back in 2008, many investors who just assumed their property would only continue to increase in value, suffered incredible losses. This type of investing limits an investor’s options. This is not the Rich Dad way. 

Investing for cash flow on the other hand, operates under the idea that rents for a property will cover your expenses – including the mortgage. In this scenario you can receive monthly cash flow AND your tenants are paying down your debt on the property at the same time. In this situation, it becomes somewhat irrelevant if the selling price of the property goes up or down. It was this approach to real estate investing that allowed many investors to make it through the real estate crash. 

If you are focusing on paper assets or starting a business, I’ll have a message for you in a couple days. 

But regardless of the asset class you are interested in, I encourage you to continue to improve your education and to think specifically about how you will invest in your chosen asset class.