FINANCIAL MARKETS IN REAL TIME :
Investment Tips
- What should we do to get money to invest?
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• Pay yourself first! Your investment should be the first of your expenses.
• Use forced savings plans! Save! Don’t spend!
• Sell and sell more!
• Use windfalls
• Never say I do not have money to invest! But rather say “how can I have money to invest!
- Why do we fail as Investors?
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• We keep postponing our investment plans
• We do not set investment goals
• We do not commit ourselves to investment goals we set.
• We know very little about investments
• People buy financial instruments such as shares when price are too high.
• People ‘fall in love’ with particular financial instrument.
• We lose patience. The intelligent investor knows that when investing, "patience is a virtue"
• We do not diversify. Instead, we invest all our monies in one financial instrument.
- Can investment be Dangerous?
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• No! Investment is not dangerous. It can only be risky!
• What then is risk? Risk is where what you expect does not come true. But with patience, we get there.
• Further, risk can be managed!
• The smarter investor knows that a risky investment is better than a safe consumption.
- Where should we invest in?
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Invest in financial assets!
• The advantage here is that, when it comes to earning money, financial instruments work harder
than you!
• Both short-term and long- term financial assets are available. These are called money and capital
market instruments/assets respectively. Egs. of money market are call accounts, treasury notes,
certificates of deposits (FD), CP. Capital market include shares of listed companies, unlisted (OTC),
bonds.
- Mindset of the Intelligent Investor?
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• Knows the difference between assets and liabilities and tries to accumulate more assets!
• An asset gives you back your money and more.
• A liability takes away your money.
• Recognize the magic of compounding (Builds cash, buys houses).
• Knows when to buy luxuries and even purchase more with proper planning.
- Avoid making the usual mistakes;
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• The illusive someday.
• Believing you are what you drive.
• Traps of borrowing.
• Play it safe, instead of playing it smart with money.
• Under investing for retirement.
• Not open to new ideas.
• Can’t get money to invest.
- Recognize that how much money you invest determines your wealth not how much money you make or earn.
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Recognize the following assets;
• Shares
• Mutual Funds & Unit Trusts.
• Bonds.
• Income Generating Real Estates.
• Plots of land.
i.e. Anything of value that produces income or appreciates and has a ready market.
