Personal Investments: Striving Towards Financial Independence

There’s no doubt about how rapidly rising costs of living is severely affecting many of us modern city dwellers.

As a result, the majority of us are constantly looking for ways to earn more, save more and spend less in hopes of one day being able to retire comfortably or achieve financial independence.

WHY MOST PEOPLE DON’T INVEST

However, most people tend to stay away from investing due to the fear of the risks involved or think that investing is only an option for the rich who have ample cash to spare.

PEOPLE ARE SCARED OF WHAT THEY DON’T FULLY UNDERSTAND

I can fully understand why people are scared, because I used to be like them too. Especially so when our parents, uncles and aunties all had bad experiences of being “conned” by friends, agents or remisers and have all lost significant amount of money trying their hand in investing.

However, as I’ve met more and more successful people and mentors over the years; I’ve realized that investing is actually the best, if not only way to achieve financial freedom.

Of course, there will be risks involved. Even the most successful investors are only right 70% of the time.

You’ll earn some, you’ll lose some.

More often than not, you’ll lose a bit more when you’re just starting out and still learning the ropes.If any investor tells you that he or she has never lost money in his life, they’re probably lying, because even Warren Buffet has made some bad decisions himself.

IT WON’T BE AS SCARY ONCE YOU DO YOUR HOMEWORK

The key, however, is to do your homework, and I mean really do your homework, and learn from people who have been consistently making money from their investments, and I mean consistently, over many many years.

Merely reading the newspapers and discussing with your friends in the coffee shop doesn’t count. In fact, when news hits the papers, it’s almost always too late. Furthermore, unless your friends are all successful investors who have been consistently making money in the market, they probably don’t really know what they’re doing.

The thing is, during a bull run, everyone makes money. You can close your eyes while picking a stock and still make money. However, most people will end up losing all that they’ve made and more when the market eventually crashes, something people are usually too embarrassed to talk about and hence you probably won’t know about.

THE IMPORTANCE OF THOROUGHLY UNDERSTANDING HOW IT WORKS

The truly savvy investors are those who truly understand how the market works and know what they’re doing. They are the ones who make money consistently in the market. The keyword here is consistently, because if you make some money this year and lose money the next 3 years (although we don’t hear about it), you are basically losing money, and a failed investor.

The truth is, most people do not really know what they are investing in, or how investing actually works. They invest because their friends said so, or because they see their friends making money (or at least appear to be), or they think they know enough from the papers, books and friends whom they hangout with in coffee shops.

DON’T GAMBLE

It is one thing if you really know what you’re investing in thoroughly, but that is often not the case. Most people make an investment based on what their friends or the papers say, without fully understanding the reasons and logic behind it. If you ask me, that’s no different from gambling, because you’re leaving most of it to luck.

INVESTING IS A SCIENCE

People who are successful investors who’re making money from investments consistently over the years will know that investing is a science. It is all about understanding its fundamentals, analysing facts and figures and then acting on them only if you see an opportunity. I repeat, only if you see and opportunity.

If you don’t see one, do nothing. Just wait. Or keep finding until you find one.

NEVER BE EMOTIONAL WHEN IT COMES TO INVESTING

In the instance that a wrong decision has been made, you pull the plug and cut your losses. It is just pure logic, statistics and science. Nothing emotional. In fact, once you become emotionally attached to your decisions, you’ll most likely lose money, and you’ll basically be gambling.

OUR MONEY, OUR RESPONSIBILITY

Ultimately, I believe that we are responsible for our own money.

That is why we should always put in the required effort in understanding the fundamentals of investing and researching on the investment we are investing in thoroughly before making an investment. That is a lot of work, I kid you not, but if you do it right, it will be worth it.

If you do this right, you will not be afraid of investing anymore, because you will know how it truly works, how much you stand to lose, and how much you stand to make, and why it is likely that you will make rather than lose, and what actions you need to take in order to achieve that, and why, based on what facts and figures etc.

IS IT WORTH THE EFFORT?

If you ask me whether it is worth it for us to put in so much effort in learning how to invest, I would say yes, because regardless of your profession, if you want to have true financial freedom, you will need to learn how to make your money work for you.

In short, you need to learn how to invest.

You need to learn how to build a portfolio, from low risk investments to high risk ones; bonds, fixed income securities, real estate, businesses, to stocks, options & futures.

DON’T GET POORER BY THE DAY

Furthermore, with inflation, if your money is not growing faster than inflation, you are actually getting poorer by the day.

Ultimately, you want to be able to be enjoying your holiday in Hawaii while your investments are making money for you. Having income streams even while you’re not working, that is the true definition of having financial freedom.

DON’T COMPLAIN & MAKE THE BEST OUT OF WHAT YOU HAVE

As to whether investing is only for the rich who have ample cash to spare, I would say that it is definitely not true, because I did not come from a rich family with ample cash to spare myself, you just have to make the best out of what you have and grow from there.

WHAT IS IMPORTANT IS THAT YOU START

But of course, at the start, the amount might be small, but that is not what matters. What matters is that you’ve started.

Furthermore, you would probably lose some money when you first started. In hindsight, you will be glad that you din’t have more to start with, because you would have lost more otherwise. Take that as payment for you tuition fees in the school of investing. Just make sure you keep learning, and you’ll be fine in the end.

RM1 IS MONEY TOO

Some of us think that we have no money, that’s why we can’t start, but I beg to differ.

Unless you really live in a jungle somewhere and are literally penniless, you are bound to have something to start with.

A few thousand is enough for you to start with stocks or bonds, even if you only start with one lot, it is a start.

If you only have a few hundred, you can buy a book, and learn how to make the first few thousand you need to start either through active income or through investing.

If you have one ringgit, you can buy someone who has been making money consistently teh tarik, or even ice-kosong. I am sure they will be able point you to a couple of opportunities for you to make your first capital through some sort of work, from which you can use the money to start.

IT IS ALL ABOUT WHETHER YOU WANT TO

It’s all about having the courage to start, and to learn continuously.

If you have one ringgit, find ways to grow that one ringgit into 2, and so on. Buying a mentor teh tarik or coffee is an investment in itself, which could open the door to a job that could make you RM1,000 a month, plus a bunch of valuable insights on how to further grow that RM1,000, and so on.

Hence, I believe that if you really wanted to learn how to invest, you can. You just need to start somewhere and some time, and trust me, the earlier you start, the better. The best time would’ve been yesterday, and now is your next best alternative.

“Formal education will make you a living, self education will make you a fortune” – Jim Rohn

Advertisements