8 Important Investing Concepts
Do you want to see your money grow over time? Investing your hard earned dollars to earn capital gains or interest? That is the best way to see it grow over the years. It is not quick, it is like planting a seed in the ground and watching it grow through the seasons. But if you don’t plant that apple tree in your back yard in your 20-30’s you won’t be making apple juice in your 40-50’s.
This list is a collection of advice from social media about the type of mindset an investor needs to have to succeed!
Money isn’t everything!
When investing, it's so important to have a balance. Focus on investing in your family, your health, your local community. Those who chase money soon find themselves crying alone in their Lamborghini. This instagram post by Tradingwalk is a good reminder to find three hobbies.
One to make you money,
One to keep you in shape,
One to keep you creative (or your mind active)
I’d like to add a fourth
One that sees you giving back into the community.
A mistake is not a mistake if you learn a valuable lesson from it
With investing you might find some things that you try don’t work the first time. That doesn‘t mean give up. You can learn from it and it will make wiser for the next attempt. The biggest mistake is never trying at all.
The book that you bought, the course that you signed up to, that first share of first crypto you invested in that didn't work out. They were your tuition fees for future success. Don't give up, be patient, this is a long term game!
There are many asset classes to learn, property, precious metals, fixed income, bonds, digital assets, and of course shares. Quality shares perform exceptionally well over the decades because of dividends and compounding interest.
Investors benefit greatly from spending the time to learn the skill of picking good stocks. Simply learning a few core concepts makes a world of difference. A stock is a business, and the basic goal of a business is to make money. If you pick stocks that are solving real problems and hold them for the long term, they should be a good investment.
Learn about market cycles
It's impossible to time the market perfectly all of the time, most of the time and hard even some of time. However, when looking at trends in the market, you can see areas to avoid.
Buying between the enthusiasm and delusion phase is never a good idea. But if you do, remember there is always the next cycle. Be patient and hold for the long term. There is a saying, "Buy the rumour and sell the news!" which means, buy when someone mentions it in the Stealth Phase and Sell when the news mentions it, in the Mania Phase.
Wake up early!
If you woke up one hour early each day for 15 years. Thats over 5000 hours of time you can invest into a new skill, in building a business, or even changing the world. The most successful people in the world wake up early. It's that self discipline that activates the mind and achieves huge goals.
From an investing perspective, you could become an expert in any type of investment if you woke up an hour early every day. It doesn't take long, it's that continual input that makes the real difference
What will you do with your 5000 hours? Let us know in the comments.
Diversify your portfolio
If your only investment in life has been a $70,000 university degree that you're paying off. It's really worth diversifying. There are many asset classes, with many different risk profiles.
There is no one size fits all strategy for investing, it's whatever you feel comfortable with. But take the time to research what's out there.
Did you know that Cryptocurrency is the first new asset class in 327 years. The last new asset class was Bonds in 1693. Bonds were introduced to fund England's war against France. Crypto is a new asset class and has the potential to capture a large amount of the market share.
Understand the Risk
I've spoken to a number of people who think that investing in shares or crypto is really risky and that they will lose all of their money, and yet they are willing to buy lottery tickets, or do the pokies at the casino.
Investing has a very different risk profile to gambling. It's important to realise that most investments are functioning businesses or projects that are achieving goals in the world. For you to lose all of your money it means that the business has failed, the founder is wrong, the idea flopped and now all the staff are out of a job. That doesn't happen as often as you might think.
A small amount of research can minimise the risk of that happening to your investment.
It's better to have invested and lost than to have never have invested at all.
Don't compare yourself with other investors
It's not helpful to compare yourself with others, as you don't know how much effort they put in behind the scenes. We all have different priorities in life and it's important to find a balance.
Everyone can do well through a little bit of research, patience, trial and error, and a willingness to learn.
Even the most skillful investor makes mistakes.
It's a long term game. Think of yourself as a tree planter, taking a small percentage of your hard earned money and planting that into an investment that you believe will grow into a tree that bears fruit.
Good luck friends! I hope you've found this helpful. Have a great day, Mitch Hamilton