I’ve invested in a lot of stupid shit that has lost me a lot of money and cost me a lot of heartache.

Now, when I say “stupid shit,” I’m talking about common investments that a lot of people invest in—and make a lot of money with. Real estate. Hard money lending. Oil and gas. IPOs, and others.

But they were stupid investments for me.

I knew very little about them. They weren’t aligned with my core values or competencies. I was greedy and chasing hot tips. As a result, I was governed by my emotions and often bought high and sold low.

Most of these investments ever paid off for me. The ones that did were by luck and created bad habits. And while I did have them, they were a drain on me, both mentally and emotionally. Even had they paid off financially, the returns wouldn’t have justified the hassle.

Over time and through harsh experience I’ve learned that chasing hot investment tips is a surefire way to waste your time, cost you money, and destroy wealth.

Now, before I even consider any investment, I make sure these two fundamentals are in place first:

Investing is about so much more than numbers and money. It’s about values, competencies, focus, personal drivers, purpose, and joy. It’s about your unique contribution and legacy. It’s about value creation and even making a difference. Most importantly, it’s about your prosperity, your peace of mind and happiness.

This is why it’s critical to understand your Investor DNA.

Where are you most gifted, and knowledgeable, and passionate? What makes you tick? What’s important to you? What would you love to be involved with, and what would be boring or unfulfilling to you? What aligns with your values, and what violates your values?

When you make investment decisions from this more holistic place, then you become more congruent within yourself and subsequently enjoy the process much more. You make better, wiser decisions.

As a result, you end up becoming a better investor and making more money in the long run than if you make short-term decisions based solely on money.

You always hear people analyzing the risk profile of investments. But the truth is this: Risk is in the investor, not the investment.

Is real estate risky? Depends on the knowledge, passion, and skill of the investor. Stocks? Business? Same.

The concept of Investor DNA is understanding who you are as a person first, and then using that knowledge about yourself as a basis for determining which investments are a good fit for you, your family, and your business.

The core components of Investor DNA include:

1. 1. Core Values: These are the things you deem to be important and esteem highly. They create a foundation for making decisions.
   2. Core Competencies: These are your strengths, experiences, and areas in life where you can create high levels of value.
   3. Core Drivers: Those things that motivate and energize you. They are essentially the “gas in the tank” that help fuel you on a daily basis.
   4. Core Focus: These are the areas of life you’re committed to, where you create rhythms and habits to bring forth results. We’re taught to diversify with investments. But diversification is the opposite of focus and will pull you away from what’s most important to you. Often people di-worse-ify by spreading themselves thin, allocating money to things they do not understand, and slow results by using a faulty methodology meant for preservation to fuel growth.

The best investments for you are those that align with all four components of your investment DNA.

What about investing is important to you?
What are the best uses of money for you?
What makes you happiest in life, and when/how do you spend money aligned with those activities?

When you look at your investing, are there areas that aren’t aligned with your Investor DNA? Do you have any investments that drain your energy?

By understanding and staying congruent with your Investor DNA, you can better mitigate risk. You can become a better investor and remain active in the game of value creation and growth.

Don’t diversify. Instead, focus on investments that are completely aligned with your core values and competencies and then remove everything else that’s just a distraction for you.

If you’re chasing returns, why not get immediate returns? Before chasing investment tips, save money on taxes, interest, and insurance. These are immediate returns that go straight to your bottom line.

In my experience with working with thousands of people, more than 10 percent of most entrepreneurs’ income is being lost in ways they don’t even see, such as overpaying on taxes and paying for hidden commissions or non-performing investment fees.

This isn’t your typical advice of scrimping and saving like a miser. Rather than sacrificing, utilize methods to create much more efficient ways to get guaranteed, immediate returns through efficiency to free up cash flow for investments:

Structure Your Insurance Properly

Poorly structured insurance is a common area where most people are leaking cash. Here are a few areas to consider:

• Raise your deductibles to $1,000 or even $2,500 (depending on the company and how much savings it provides). The lower your deductible, the higher your monthly premium. The reason you have insurance is for major losses, so it usually doesn’t make sense to have a low deductible.
• Check for duplicate or unnecessary coverage. You may have too many policies that cover the same thing. One example would be an umbrella policy that has more than the required minimums on car and homeowner’s liability for the umbrella to kick in.
• Use umbrella policies to coordinate insurance. Umbrella policies provide liability coverage over and above your automobile or homeowner’s policy. With properly structured umbrella policies you can often double your coverage while lowering your premiums.
• Use a health savings account. A health savings account (HSA) is a tax-advantaged medical savings account available to U.S. citizens who are enrolled in a high-deductible health plan (HDHP). Currently, the funds contributed to an account are not subject to federal income tax at the time of deposit.
• Combine long-term care insurance with life insurance. Long-term care insurance may be unnecessary if you have a proper provision on your life insurance death benefit.

Incorporate for Tax Advantages

Business owners get tax breaks that employees don’t. In fact, there are thousands of pages in the tax code and, of those, only a few hundred are for W2 and 1099 employees. The other pages are ways you can get tax deductions through business ownership.

It doesn’t matter if you have employees or an office. Set up an entity as quickly as possible, and coordinate with a CPA to take advantage of the following possible deductions and many, many more.

• Home Office Deduction: Do you make phone calls or use a computer? Make a room in your home a dedicated workspace for your business and deduct it as a home office expense. You can also look into 132(j) if you have a pool, gym, or other area for employees to use.
• Phone, Internet, and Utilities: You can deduct the phone, fax, and internet expenses associated with your business, as well as a percentage of utilities.
• Meals and Entertainment: When you’re traveling for business or meeting with a client, you can deduct your meals. Certain entertainment expenses are also deductible.
• Car: Any time you drive for business purposes you can deduct your expenses.
• Travel: Travel for business purposes is tax deductible.
• Education: Education costs related to maintaining or improving your skills for your business are tax deductible.
• Hire Your Kids: IRS rules allow you to pay your kids for specific tasks and deduct what you pay them.
• Use of Your Home: You can rent your home to your business for fourteen days or less to host functions for employees or vendors, and take the tax deduction for the business without claiming it as personal income.

These are just a few examples. Some bigger opportunities to look into include:

• R&D Credits
• ERC Credits
• Section 199a
• Opportunity Zones

Obviously, the tax code is more complex than these simple descriptions, and you’ll want to use a qualified CPA to take advantage of all deductions and stay within the rules.

Analyze Investments for Hidden Fees

There are tons of hidden fees in conventional retirement plans such as 401(k)s and IRAs, as well as the funds that fuel those vehicles. Even a 1 percent fee can end up being hundreds of thousands of dollars over thirty years.

Investment fees can include the following and more:

• Management Fee for a Money Manager: Typically, in the .5 to 1.5 percent range.
• Expense Ratios: For mutual funds or exchange-traded funds, .5 to 2 percent depending on the fund.
• Administrative Fees: In the case of a 401(k), 403(b), or other similar plans, there are typically fees for the plan itself. Admin fees, legal fees, annual plan fees, and more.
• Loads: Mutual funds, especially A, B, and C shares, have sales loads up front, on the back end when you sell, or both. These can be as high as 5 percent or more. This is in addition to the expense ratio on the funds and is typically a commission paid to the broker who sold the shares of the funds to you.
• Miscellaneous Fees: There are other fees, like 12b-1 fees (mutual fund marketing fees that you pay for), which may seem nominal but especially have an impact when added on to the above fees.

Plugging financial leaks and staying aligned with your Investor DNA can help you mitigate risk, and keep more of what you make while protecting your time and energy from loss.

The notion of set it and forget it, or wait for thirty years to find out if your plan works, or chasing returns and products to have some miracle result, does not lend or lead to prosperity.

Prosperity is not a do-it-yourself game, or a game of chance. It’s a perspective, a skillset, a language with committed action—a way of being.

As you plug your financial leaks, take part of that money to build the most critical skillsets to expand your ability to create value and make more money. Learn marketing, sales, and ways to solve problems.

When you invest, focus on yourself first, then efficiency, and over time, learn the best ways to grow your money through your Investor DNA.

Make more money.
Keep more of the money you make.
Grow your money.

This is the path to long-term wealth.