Deciding Whether or Not to Invest Your Home Equity

have made very little economic sense. The investments didn't have clear value propositions (they weren't creating real value in the marketplace), they weren't collateralized (or backed by hard assets such as real estate), they were speculative, they were based on artificial demand, and they had poor or no exit strategies.

The Solution: Here are just a few things to consider with any investment: Is there a real demand for this investment? Is there a clear value proposition? Is it legal? Is it ethical and moral? Is it collateralized? How well can you control the terms? Do you have the opportunity to contribute to its success in meaningful ways, or are you contributing money alone? What are the tax consequences? Can you create a foolproof exit strategy? Is the investment self-sustaining, or does it require ongoing capital contributions from outside sources? How soon will it create cash flow? Do you know the people involved? Do they have an established track record of trustworthiness and success?

If you can't answer any of these questions satisfactorily, then either stay away from the investment or provide viable solutions for any troublesome aspects.

Reason #4: Investments Removed From Soul Purpose

Soul Purpose is the combination of your inborn abilities, talents, and passions and that provide a natural direction for your most fulfilling life. It is your greatest purpose for being on the Earth--the mission you were born for.

Every thought and action leads you either closer to living your Soul Purpose, or further away from it. Few people invest in things that align with their Soul Purpose because they get sidetracked chasing high returns. Investing out of alignment with Soul Purpose inevitably leads to mediocrity at best, and failure at worst.

The Solution: What are you great at doing? What things are you naturally drawn to? What are your dreams? What is your vision of your best self? What things increase your energy? These are the only things you should be investing money into. For example, if you have a passion for real estate, invest in real estate. If your passion is philanthropy, start a non-profit or contribute to an existing one. If you love cooking and entrepreneurship, maybe starting a restaurant makes sense.

Creating portfolio income is hard work, and the only way you'll endure challenges is if what you're doing is an expression of your Soul Purpose. The best investment is an investment in yourself and your Soul Purpose through education. Education will help you develop your Soul Purpose and bring it to the marketplace practically and meaningfully.

Reason#5: Learning the Wrong Lessons

If your investment fails, what's the lesson you're going to learn? For most, the answer doesn't go further than, "I knew I shouldn't have done that!" This type of thinking is disempowering and leads people to avoid future action. They learn to stay away from investing, rather than learning how to manage it better.

The Solution: No matter how well you mitigate risk, in a dynamic world things will inevitably go differently than you anticipate. Commit now to learning the right lessons when things go wrong. Learn what things you can change about yourself and your approach to increase your safety, returns, and success. Unfortunate events present amazing opportunities to become more confident with your investments, rather than cynical and distrustful.

Conclusion

Investing your home equity can be one of the riskiest strategies if you do so for personal consumption, to put money into things you know little about in order to chase high returns, to invest in inherently risky investments, to invest in anything removed from your Soul Purpose, or if you will learn the wrong lessons when unexpected events occur.

However, it can also be a powerful strategy that will help you unlock your financial potential. To do so requires that you never borrow money to consume, you always have a good understanding of your investments and never invest to make money primarily, your investments make good economic sense and your risk is mitigated well, you only invest in things that align with your Soul Purpose, and you commit to learning the right lessons when you encounter setbacks and difficulties.

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