Investments are a necessary part of business, entrepreneurship and life in general. It is like the process a farmer goes through when He plants a seed, nurtures it and hopes for a harvest. The same way, we also watch our investments warily, praying it matures.
Building a profitable long term investment portfolio is much more than jumping onto good opportunities. It is a skill that needs to be mastered. It is just like building a new business. More often than not, it also requires having the proper mindset, rather than just the required business tools.
There is no need to fear the prospect of this journey to financial freedom though. The path is well worn. Too many people have walked it before. But then, there are a few things you have to keep in mind going forward.
Here are eight of such mindsets every budding investor must have;
1. Mind Your Timing
Starting early to invest gives you a lot of latitude in investment as you can make smaller investments over a longer period of time and still retire with a decent income. If you start at 18 you need only save up a lesser amount consistently than someone who starts at 38.
The timing of your decision is also key in making investment moves. Too many investors get stuck in analysis paralysis and miss out on the best time for the investment. Opportunities don’t come around only once, but it is really not easy to predict their cycle.
2. Trust Your Gut and Use The Data
The war between data and intuition has existed for a while among investing circles. Should we trust out gut feeling or go with what the statistics and data say? There have been a number of unexpected investments with great results that no one saw them coming.
Your gut feeling can often paint a pretty appealing picture in your mind that can’t be ignored, so don’t ignore it; get all the available data there is on that particular investment your gut suggests, but don’t let it rob you of a great opportunity. If you can’t shake that idea, take the risk.
3. Be Realistic in Your Expectations
While we all wish we can hit it big in the casino or get a real lucrative bet to work out fine or even to win the lottery, investments mean more than this. Investments are often slow, but consistently yielding income and not a way to get rich quick. It assures you of a better long term financial security.
If the offer sounds too good to be true, it probably is. It is safer always in the long term to invest in opportunities that will yield a steady and decent income.
4. Always Look to Diversify
Diversifying your investment portfolio will help you remain reasonably stable, because different investments will have downtimes at various times in their lifetime.
Having all your investments in stocks for instance will be bad for you if you stumble into a real recession. Although you can improve your chances somewhat with Motley Fool stock picks. But having some investments in property or gold at such a time may see you reasonably maintain your financial poise.
5. Have Investment Goals
I have seen too many people that are just waiting for that silver bullet to show up. Truth is that it doesn’t exist. Your investments should be tailored according to your unique life circumstances, objectives, risk tolerance, and goals.
What do you want to achieve with your investments? What areas of investment are you concerned in? What is your projection for the next 5 to 10 years? Questions like this will help you make detailed goals with timelines. And this will help you with investments, when to and how much to invest.
6. There Is No Such Thing As “Small Money”
Guess what makes up big money? An aggregate of small monies… if you are one to spend smaller amounts without planning, you may not make a very good investor till you change that mindset.
Learn to value every cent and dime if you are going to invest properly. Income from an investment may seem small, but the value of most investments is in the cumulative over the long term so you need to be built for longevity and consistency.
7. There Is Bound To Be Some Loses Sometime
No great investor has escaped a measure of loss. You will experience several 50% drops in the market value of your portfolio over an ordinary investment lifetime, you cannot avoid them so learn to deal with it.
Asset prices fluctuate all the time. Sometimes, these fluctuations are irrational. Sometimes, these fluctuations are caused by macroeconomic events and are totally out of your control. This is why diversification and mental stamina are necessary.
8. You Can’t Do It Solo All The Time
Not everyone has the innate ability to avoid foolish mistakes and to make rational decisions. You need a qualified investment advisor, to help you differentiate between chasing the wrong investments and making a gem of an investment. It’s not always as great as it appears to you at first
If you even suspect that you do not understand as well as it seems, then you should get yourself a qualified investment adviser.
That being said, investments must be made, so start now.