Your early market search and preliminary patent search are both types of research for which the only cost is some of your time and they are important educational phases in the development of your invention. Your first step will be to check out every store in your local area where such an item as you envision might be offered for sale. If, for example, your idea is for a new type of kitchen gadget, you will certainly want to check the kitchen specialty stores. But, you will also want to check any and every store that sells kitchen gadgets. This means that you might find yourself looking in stores such as Wal-Mart, Target, your local grocery store, the hardware store, the corner convenience store, the department stores at the mall and even the stores that specialize in unusual items, such as Brookstone or Sharper Image. You will need to be creative in thinking of all of the places where an item such as the one you envision might be offered for sale.

Intuitively, the described long-term pattern contrasts with the much more cyclical behavior of credit spreads. Yet it should be noted that a large part of this deviation has to be attributed to changes in the databases of the rating agencies and the average quality of recent new issuance. When the database contains more investment grade companies, default rates naturally tend to be lower, and vice versa. Furthermore, historical data on default rates does not only reflect the broad credit cycle, but also changes in companies’ preferences towards bank debt and corporate issuance. When banks’ lending standards are particularly restrictive, especially companies with a lower credit quality may prefer to finance their business by issuing corporate bonds. For the high-yield market there is empirical evidence that the average maturity of outstanding debt is correlated with the probability of default. In other words, default probability changes over the life of a bond. While at the date of issuance the company has sufficient capital, there is often considerable uncertainty about the viability of the business model and future economic success. Together with the 1990/91 recession the enormous volume of junk bonds issuance that took place in the late 1980s is responsible for the peak in default rates in 1991. Consequently, default rate data provided by the rating agencies is not a very pure indicator of credit conditions through time.

Investors need to know their limits. In some ways, investing is like driving. Risks must be balanced with rewards. All drivers know that the faster you go, the sooner you get there, unless you run off the road or get ticketed or die in a car wreck. Speed must be balanced with safety. After years of driving, several tickets, and a few wrecks and near misses, most drivers know their limits. Some drivers are comfortable in the fast lane, yet slow down to the posted speed limit on exit ramps. Other drivers like the slow lane, but leave the motor running when filling up the tank. The raging driver is only happy on the road honking and flipping people off while the ultracautious never drive at night or on freeways. Ultimately, arriving faster is a secondary goal for most drivers.

Investments are touted for their high returns. Investors must balance return with anxiety and other emotions. High return often entails high anxiety, and low return usually means low anxiety. However, investing is complex. Some investments have high returns with complexity and low anxiety. Investors who can handle complexity will be happy. Other investors will be miserable. Some investments offer high returns with extensive effort. Some low-return investments entail an emotional roller coaster. Extreme speculation sometimes leads to gambling addiction. Some investors can handle a multitude of investments, and other investors are only comfortable with one asset class.

As a financial planner who spent the first part of my career helping people save and invest money, this opportunity cost is the single scariest. It is not just a missed opportunity that you’ll someday kick yourself for, snap your fingers, and say “Aw Shucks!” Rather, it’s an opportunity cost that will determine the day-to-day existence of possibly one third of your entire life. I’m talking about retirement.

Now, a good percentage of you reading this book will say something along the lines of “retirement is so far away that I’m not worried about it” or “I’ll worry about retirement when I get out of debt.” But, the key thing I want to pound into your head is that retirement planning is monumentally less painful the earlier you do it. In fact, if you wait until 15 to 20 years before retirement to start planning, you may not be able to pull it off.

Why is it such a big deal? Well, the biggest problem is that people are living longer and longer, and our employers and Social Security system are giving us less and less. In fact, it is very possible that you might retire at age 65 and live to be close to 100 years old. That means that 35 years, or one third of your life, will be spent without income from a job. If you are hoping Social Security is going to cover even the majority of that, think again.

I don’t mean to scare you, but rather hope to give you some major motivation for moving forward. Just like my wife kept her eyes on that little sailor outfit during delivery, you need to keep your eyes on retirement as you try and decide what to do with each and every penny of your income and expenses.

While in general we have a lot of control over our assets, we have relatively little control over our liabilities. In many parts of the world, it is impossible to fix the interest rate on your mortgage for more than a handful of years. Where you can, make sure you fix the interest rate!

One of the huge advantages of the real estate market in the United States relative to many other countries is that it is possible to obtain mortgages—even 30-year mortgages—where the interest rate is fixed. I am astounded at the number of investors who choose not to fix the rate. For the sake of perhaps a 0.5 percent lower initial interest rate, they are willing to risk interest rates going through the roof in the future. It is a folly not only committed by legions of otherwise sane investors, but also aided and abetted by armies of mortgage brokers who no doubt get a better commission on loans that turn out to be more lucrative for the banks.

Furthermore, you should avoid any requirement for a personal guarantee on any real estate loans. The reasons are twofold.

First, a real estate investment should stand up on its own two feet. The risk of having a personal guarantee is that it may be called up, and you would be forced to pay off principal on a loan taken out by an entity with limited liability. Signing a personal guarantee, of course, breaks this liability fire wall.

The second reason why you should avoid any personal guarantees is that when you apply for future loans, banks will often ask for a list of your contingent liabilities—these are liabilities that may end up on your shoulders. The more items in this list, the more reluctant a bank will be to lend you any money.