An investment is an asset or item that is purchased with the hope that it will generate income or will appreciate in the future. In an economic sense, an investment is the purchase of goods that are not consumed today but are used in the future to create wealth. In finance, an investment is a monetary asset purchased with the idea that the asset will provide income in the future or will be sold at a higher price for a profit.
Investment is about the future. You are taking action today for tomorrow. The term “investment” can be used to refer to any mechanism used for the purpose of generating future income. In the financial sense, this includes the purchase of bonds, stocks, or real estate property. Additionally, the constructed building or other facility used to produce goods can be seen as an investment. The production of goods required to produce other goods may also be seen as investing. Taking an action in the hopes of raising future revenue can also be an investment. Choosing to pursue an education can be considered an investment, as the goal is to increase knowledge and improve skills in the hopes of producing more income.
The purpose of investing is to make more money. No matter how simple an investment may appear, it still involves some element of risk. You invest to earn a return on your money, but returns are not the only consideration. Risk and return are connected. The higher the risk of an investment, the higher the potential return. Wealth-building is not something restricted to those with a big pile of money; rather, it is something everyone should be doing. And when it comes to building wealth, nothing beats Investments. However, a lot of people are still sceptical about investing, especially when it comes to risky avenues. Many people are not investing because they are afraid of taking the risk. It is not about being in their comfort zone. It is not about being lazy. It is not about the lack of knowledge. They are afraid and scared of losing their hard-earned money.
Everyone has a degree of the fear of failing. It is a human nature. There is nothing wrong with fear. Fear becomes dangerous when you allow the fear to dictate the kind of life you live. We usually do not like to step out of our comfort zone because we are scared due to not having enough confidence. The fear of failure is also one of the biggest barriers that hold us back from trying something new – like making an investment. Failure is not the end of the world. Rather, it is a learning experience. Failure can be used as a feedback. When it comes to investing, the fear of failure makes us either procrastinate or give up completely on the idea of investing. Most of us have not even realised that investing is not a choice. It is necessary.
In the Bible anytime, an angel meets with a human, the first word that comes out from the angel is “Fear Not.” Why is this? Angels must understand the reflexive fear in human beings. Why do you suppose the angels (and the writers of the Bible) think the human first reaction will be fear? Why would we be afraid if it is good news? It is because fear is a part of our survival instinct. Fear is our emotional response to dangerous circumstances that we believe have the potential to cause death, injury, or illness. This harm is not just limited to physical damage; the threat to one’s emotional and mental well-being can generate fear as well.
For the person trying to survive, fear can have a positive function if it encourages him or her to be cautious in situations where recklessness could result in injury. Investment can be reckless, so there is the need to be afraid in a positive way so one cannot be indulged in reckless act and rash investments. This is what is good about fear. Unfortunately, fear can also immobilise a person. It can cause him or her to become so frightened that he or she does not perform activities essential for survival. Most of us will have some degree of fear when placed in unfamiliar surroundings under adverse conditions. There is no shame in this! If you have not invested in the investment surrounding, this can be adverse and threatening. Everyone must train themselves not to be overcome by their fears. Ideally, through realistic training, you can get the knowledge and skills needed to increase your confidence and thereby manage your fears of investing.
When you work 9 to 5, you work for the money. By investing, your money works for you. You are no longer serving money, but money serves you. This will free space to enjoy a higher standard of living. Investing allows you to use well-managed investment plans as a prudent means of saving and growing money that you will need in the future. An investor can predict making a profit on their investment due to their advance research and prudent selection of an appropriate investment vehicle. They are not out placing bets in the markets, but they are instead of expecting a profit to result from their research and investment activities.
Everything about life is a risk. You will never achieve your dreams without risk. Sleeping, eating, walking on the street, having a shower, are all risky. This does not mean you cannot live yourself. Life is short. Do not waste time because your time is limited. There is no perfect time or condition to start investing but now. There is no reward without work, no victory without effort, no battle won without risk. Risk taking, trust, and serendipity are key ingredients of joy. Without risk, nothing new ever happens. Without trust, fear creeps in. Without serendipity, there are no surprises. There is no reward in life without risk.
Having a key investor mindset certainly does not guarantee that your investments will always appreciate in value since you could still lose. Nevertheless, having an investor’s mindset does help you direct your interests, and hence your capital, toward making less risky investment choices, even if you must accept lower returns. The advantage of this is that you are more likely to preserve your investment capital over the long run.
One of the greatest aspects of long-term investing is that anyone can do it. Investing is a way to nurture your savings, to give them the best opportunity to go further. It is how something small, like one pound, can grow to become something significant. The most important thing about investing is starting early. Successful investing is about managing risk, not avoiding it. Wise spending is part of wise investing. It is never too late to start spending wisely. Spend each day trying to be a little wiser than when you woke up. Do not put your trust in money. Put your money in trust. It is not your salary that makes you rich, it is your spending habits. Be brave. Take risks. Nothing can substitute experience.
Contact me if you need help to start investing.
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Saturday, 16 January 2021 19:26
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