One thing that distinguishes investors from traders is time. You must learn early that every market has its ups and downs. The bet is that the ups will deliver more value than the downs and/or that your funds are safe and secured.
The real estate market will not always deliver exceptional returns, nor will the stock market deliver returns above inflation. Time is critical to any investment and if you are not ready to play the long term, you’ll burn your fingers.
As I have witnessed many times when I offer financial advice, there are three major challenges people face when they invest
1. FOMO: I think this is the most prominent. I have seen folks make useless investment decisions because others are doing it and it is working. “It is paying” is not proof that the investment is true. I have found out that people want quick and arbitrary profit. I’ll most likely not give you investment advice if you are chasing such. I truly wonder why people invest in a variable asset like Forex and expect a fixed return. I tried explaining this to people but it fell on deaf ears. A smart investor does not go with the crowd.
2. Investing more than you can afford: One major lesson we need to learn is how to grow our investment patiently. Don’t be in a rush to invest a certain sum. You must understand your income flow, the different buckets attached to it, and the percentage they take. It takes wisdom to know that wealth is not built in a day.
3. Ignorance: Knowledge is a key aspect of financial prudence. You can a wise financial decision but if you do not understand the investment, you would have rushed out before harvest. “An investor without investment objectives is like a traveler without a destination.”
As it is often said, “the time in the market is better than timing the market. I remember the words of Carlos Sim Helu, “Courage taught me no matter how bad a crisis gets ... any sound investment will eventually pay off."
It is financially unwise and emotionally draining to hop in and out of every sound investment. Do your due diligence and stick with it. Be unshaken if the fundamentals are unshaken.
To live a profitable lifestyle, you must learn how to play the long-term game.
Cheers to a profitable lifestyle,
TL.