There are lots of investment products you can invest your money into. You can invest in stocks, real estate, gold, silver, commodities, business, etc. Most people are obsessed with an investment product and procedure without having the right plan in place. Just as starting a business require a business plan, so also does investing require a plan. If you have no written plan on how to invest your money, forget about investing.
It’s worthwhile for you read the following tips before you rush into investing your money in any investment product.
Invest in something you understand
There’s a strong inter-relationship between business and investing. Just as it’s advisable you start a business with a thorough understanding of the industry you are going into, the same is applicable to investing. It would not be wise to start a business or buy an investment product, just based on the recommendation of a friend or a financial adviser. Same can be said with getting involved in investment just because someone succeeded with that same product.
Without financial knowledge, people look for someone to tell them what to do and where to put their money. Understanding is vital to any endeavor you find yourself in life including investing. Don’t jump into any investment, be it stocks or real estate without first understanding the intricacies of such an investment. Lack of understanding is the primary reason why investors panic in an economic downturn. With understanding, you will be able to maximize your profit, manage risk and minimize your loss in any investment.
Invest in something you are passionate about
Passion is what keeps you going when the going gets tough. – Warren Buffett
Do you know why Warren Buffett emerged the world’s richest investor? Or Donald Trump the biggest real estate developer in New York City? The answer is that they are both passionate about their chosen investment field. You have to be passionate about investing to get the best out of it. You must love the game regardless of whether you win or lose. Never invest in something you are not passionate about, you will only end up with heartache.
Invest in something you are willing to learn through
Life is a teacher; the more we live, the more we learn. The only thing constant in life is change and in the world of investing, such change occurs very rapidly. Now how do you stay in control when the tidal wave of change comes? How can your investment strategy stay relevant in times of change? The answer lies in continuous learning. Investing is like a rapidly flowing river and to stay on course, you have to be on the edge ever ready to learn.
In times of rapid change, the experience could be your worst enemy. – J. Paul Getty
Never invest in something you hate learning about, no matter how lucrative it may be. If you find reading annual reports boring, or you hate charts, math, calculations and all the jargon associated with technical analysis, then stay away from stocks. If you hate fixing toilets, then stay away from real estate or better still, partner with someone who loves fixing toilets. The lesson here is this; never invest in something you are not willing to learn through.
Invest in something you are willing to stick with
Business and investing have its good times and bad times. If you are not persistent enough, you will give up. So before you commit your money to any business idea or investment, be sure you are prepared to follow it through to the end, which might lead you to either losing your money or making some profit. Never invest in something you are not willing to stick your neck with.
Invest in something you have control over
Lastly, control is one of the most important criteria every successful investor looks out for in an investment. Never lose control of your investment because control is essential to risk management. Learn to increase your sales, learn to control your cash flow, learn to adjust your liquidity ratio, learn to buy, sell or hold, learn to increase the value of your business…. Learn the power of control.
Never fall in love with an investment opportunity without first considering these factors, because they are fundamental to sound investing and wealth building.
Ignore them at your own peril!!!