Best way for newbie to invest?

[Joe Sivic]

I am looking to get started investing, I have some money to invest and am looking to learn how to do this the right way and not learn the "hard" way by investing my money foolishly. What systems are people using successfully out there?

[Jerry K.]

@Joe Sivic

What follows is only my opinion, and you don't know me from Adam...

Your thought process does not match reality. I agree that it makes sense - learning investing (of any kind) should be as simple as paying somebody to teach you and hold you accountable.

Reality - The way most people learn real world investing is by learning and doing it themselves. And as backwards as it may seem from a logic point of view, mentors who don't charge you cash, are usually better teachers than a "guru course".

Gurus may start out as benevolent souls that want to share their knowledge and help newbies. The truth ends up being, the people (students/customers) that come to them (gurus) and say they want to learn, actually don't want to do the work. However, the students do want the results.

In tax lien investing, the student wants the $300k property for an $88 tax lien. Or they want 36% returns by just clicking a button on their home computer and doing no research on the property.

A guru soon learns they can make money without holding the customer accountable - and most of the customers don't want to be held accountable. 95% of their customers will never follow through on using the training, and will never ask for their money back. So gurus end up becoming marketers of their systems - and not teachers.

And what do the gurus learn over time? There are people that will pay $97 for a course. A guru can make a ton of sales at $97 - and know that 95% of the customers will never work at it or ask for a refund. Of the 95%, 5% - 10% of those people will actually have the means (via cash or credit) to pay for a $500 Mastermind or Master class. Of those people, there will be a handful of people who will then pay another $9k, $15k or higher for one-on-one training (with the guru's coach - not the guru).

Back to the $500 group, there will be a good amount of those people who will not go for high dollar coaching, but they have $75k or more in their 401k. The $500 class teaches them how to transfer their funds into a self-directed IRA account where the customer can then buy their own liens. But even that is work, so the guru has an offer, they will manage that self-directed IRA in tax liens for a 5% (or more) fee. In effect, the customer has paid $597 to learn how to make money available for the guru to invest.

Gurus have found a way to have people pay them to become investors. Call any of the guru programs and you will be besieged by calls for advanced classes. That will be followed by calls to invest your money with them.

The "illogical" scenario of a mentor who does not charge you a fee, is that a mentor;

1. will usually work with you directly
2. lets you see the details of the research
3. lets you see their actual deals/purchases
4. has you work - and yes, that means, you will do work for them

And point #4 is that you are working for them, most of the time, for no pay. Sometimes they pay you, sometimes they let you invest your funds alongside them.

You are right, a mentor who lets you in on the details and teaches you for free doesn't make sense. But a mentor who looks for a commitment of your time and teaches you while you work helping him/her do their investing - is a much better situation than a "guru" who is charging you dollars to learn - without actually working directly with you.

You mentioned you "don't want to learn the 'hard' way". The reality - you will never be perfect - even with a mentor - even with a guru's system. You will have duds. You learn so much more from the mistakes than the successes.

Instead of looking for a "system", try to describe to us what you want from lien investing. Example; "I want to mainly earn high rates of interest on liens that pay off in a year or less." or "I want to buy liens on properties that have a high chance of me owning within 2 years."

Or perhaps @Dmitriy Fomichenko hit the nail on the head and you want to invest part of your 401k funds with a professionally managed tax lien fund. You don't have to worry about learning the local statutes, do the research, pay the fees and do the follow up. Then your question on BP would be; how do I find these tax lien managed funds?

I'd hate to see you spend lots of dollars on a "guru system" only to find it's not personal enough. I also don't want you to think a system will insure you avoid mistakes or duds. Those will happen. Embrace them and learn from them.