Bonus #19

Ellen Yin19min

Ellen Yin

00:06

Hey, welcome back to another bonus episode of cubicle to CEO, the podcast where we ask successful entrepreneurs, the business questions you can't google. If you're new here. Hello, my name is Ellen Yin, I'm your host. And today I wanted to continue this conversation that I started with Kaitlyn on the podcast this week. So she is installment number two in our retirement for entrepreneurs mini series on the podcast, we're going to take a pause from the series, and hopefully bring it back at a later date when we can continue to select another guest that shares a different investment strategy than the one that Kaitlyn shared, which is all about investing in the stock market. And different than the one that Erinn shared, which is about investing in real estate. So this is a TO BE CONTINUED series.

Ellen Yin

00:53

However, there were a lot of amazing concepts that Kaitlyn brought up in our interview on Monday that I have loved seeing your story tags around. And so many of you are like, Oh, my goodness, my mind has been blown by this conversation. And I concur. Kaitlyn is brilliant. And one of the concepts that I actually learned from Kaitlyn is this concept of creating an investment thesis anytime that I want to deploy funds towards any sort of investment. And this is particularly helpful because of a couple of reasons. So essentially, when I'm working with Kaitlyn as my wealth manager as my financial advisor, we have created together a plan for how I can be work optional in about 12 to maybe 15 years. And to reach that financial milestone, we have certain savings goals that we need to reach on an annual basis to build a portfolio of a sizable amount that can allow me to withdraw the income that I need each month from the portfolio in a sustainable way. So that I can again, be work optional if I choose at that point in my life. And so anytime I want to take money and put it somewhere else, instead of into my stock portfolio, I have to be clear on why this detour from the path makes sense to add. Right?

Ellen Yin

02:16

And so this investment thesis, when I first heard this word, I was like, Oh my gosh, like Is this like a multi page? You know, like, very complex dissertation, isn't it? Like I was thinking of a master's thesis where you have to like, defend your thesis? And she was like, oh, no, no, it's like, it can be one to two paragraphs. The whole point is to be clear on why you are investing your money. In this particular vehicle or strategy, what is the best case scenario for what you hope to achieve from this money? What do you want this money to do for you. And also making sure that you have assessed the risks and possible worst case outcomes, and that you've accepted the risks involved, even if that risk includes losing all the money that you have invested, you know, in whatever particular vehicle you are writing this thesis for. So that's kind of the point of an investment thesis. And I thought it might be helpful because this was a newer concept to me.

Ellen Yin

03:15

And I'm just, you know, starting to practice it. So I thought, I will walk you through two different investment opportunities that I actually wrote an investment thesis for. And another cool thing about writing this investment thesis is it's kind of a documentation of your personal journey, as an investor, similar to how my quarterly income reports here on the podcast really serve as a documentation of my process. And my journey as an entrepreneur as a business owner. So with these investment thesis is if a great one, Kaitlyn can put it into my personal documents. And so I can reflect back on my thoughts a year, five years, 10 years down the line and see how closely did the outcomes actually match up with what I envisioned for this investment? You know, was I correct about some things was wrong about some things? How do the risks actually turn out? All of these things help me become a better investor, right. And so it's another way to kind of capture what you're feeling or thinking in a moment in time, and then have an opportunity to reflect on it later. So anyways, that's kind of the concept of an investment thesis.

Ellen Yin

04:23

We didn't really dive into this much in my conversation with Kaitlyn in her interview on Monday, and so that's why I wanted to bring it to this bonus episode. But here are two investment opportunities that I recently have considered that I kind of, you know, created this investment thesis for. So I wanted to walk you guys through it. So the first opportunity was to buy a commercial building downtown. And this was, you know, this is I should say, this is a building still exists. This is a building that is selling for over a million dollars, which would be obviously by far not only the largest real estate purchase I would have ever made. If I had gone through with it, but also the largest purchase period I would have ever made right period. Not even just purchase investment, you get the point. And so when I was looking at my investment thesis for this opportunity, I came up with three things as to why I would want to invest in this property.

Ellen Yin

05:22

Number one was, for this particular investment, I would be kind of banking on asset appreciation for a return on my money. So I wasn't looking at it from a cash flow perspective, which is different than how I would look at most rental property opportunities. Like if I were to buy, let's say, a vacation home to have as a short term rental. Or if I were to buy a single family home, or a multi family home and rent it out to long term tenants, that would be an investment where cashflow would be my top priority. If the property doesn't cashflow, then I'm not interested in making that investment. For this particular asset. I know that the value of the property downtown is only going to increase exponentially over the next decade, as there is continual development in this area. As the city grows, I live in the capital of Oregon. So actually, not a lot of people, you know, pay attention to what's going on in this area because Oregon's mostly known for Portland. But I know that there's a lot of economic activity, that will inevitably bring more demand to downtown. And so for me, I saw this opportunity as a long term hold, like you would buy this property and hold it for at least 10 years, potentially even decades. And then the returns will really come from the sale of the building eventually. So I was looking at it through the lens of asset appreciation, which is different than cash flow.

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