I mentioned this before, I am not a financial advisor. So know that there is a lot more to learn than what I will talk to you about in this article. However I wanted to get this message out, because a lot of the time speaking with clients I find confusion around investing.
The primary focus of investing is to make money for you and create sustainable wealth, so you can stop working for money. There is only so much time in a day that you can extend yourself for, so you need to learn to leverage your efforts.
- Stop Procrastinating! – You may think that you do not have enough to get going now. And this may just be the case in a certain asset class at this given moment. But if that is the case, then at least set up a savings plan to find the way to create what you would need for your investment. Do not just wait for things to happen.
- Learn the difference between having a high income and being wealthy. High incomes don’t necessarily mean that you are wealthy, especially if the high income is from one source. If you have to work huge hours for your large income, your hourly rate may also work out less than someone who earnt less and worked less.
- Set your investment goals – this will enable you to figure out the right strategy to achieve these goals. Create an allocation strategy to help you maximise returns and minimise risks. These need to be reviewed on a regular basis.
- Research the types on investments that you may be interested in. Do not invest in something that you do not understand! In general, there are stock, bonds, property, businesses, REITS, FOREX and the likes.
- Invest as early as you can. And this can be in a term deposit initially! Don’t have to go for something big first up. Remember lots of little things compounded give great results!
- Think long term! We love to dream about becoming rich overnight, but unless you win the lotto, building wealth takes time and effort.
- Evaluate opportunities based on the bottom line. So what if it is a sewerage company that would bring you your next profit? Be open to different industries, and even ones that don’t even exist right now.
- Buy below market value. It is a nice line to use, but a tricky one as the market goes up and down. So really buy below an asset’s intrinsic value. Make sure that you do your due diligence fully and not just buying a dud!
- Some investments will not take off. So know when to quit. There is no point holding onto something that is putting a hole in your wealth bucket.
- Build a team. If you are the smartest one in your team, you have a problem as your opportunity to grow is limited. Seek the masters in the field you are interested in and learn from them.
- Don’t be a sheep. Like Warren Buffet said – ‘Be greedy when others are fearful and fearful when others are greedy’ Go against the herd, chances are that’s when you will make money.
- Learn about taxes and how to use them to your advantage. Don’t be afraid to ask.
Investing is a game! It means a lot of research, studying and action, that is why you need to choose the investment you will enjoy. The poor make excuses and say, they never have enough time between their jobs, their family and whatever other obligations they have.
The wealthy create the time to invest and invest in their time as well. It’s a habit well worth developing.
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