Most investors never track what they actually made on their investments. You need just two metrics: cash-on-cash return and IRR. Before you buy anything, ask if it fits your portfolio goals or if you're just chasing FOMO.
One of the things I find fascinating about entrepreneurs is that most people don't have a method for actually tracking the returns on their investments. They make an investment, it's fire and forget, and they think it's doing well, but they don't actually have any kind of spreadsheet or tracking tool that shows, hey, what's the date I made this investment? What's it worth now? And what is my returns year over year, cash on cash? And look, it doesn't have to be complicated. I think a lot of people want to have a 64-tab spreadsheet that's calculating all kinds of metrics. Really you just need to concentrate on 3 or 4 that are important to you. So for me, it's always going to be cash on cash return and IRR. Those are the things I'm focused on. The other question that people fail to ask when they're making an investment is, how does this align to my goals? We see FOMO show up a lot and people go, oh man, I need to be in the crypto market, and they dump all their assets into the crypto market when they don't know anything about crypto because they hear about their friend who became a crypto millionaire. My first question is always, how does this strengthen my portfolio and what are my goals with this portfolio? If it's to increase cash flow, I actually don't need any crypto in my portfolio and I don't care if I miss on those returns.
