This is the final chapter in a series of articles designed to teach you the basic principles of investing. If you have read all ten of the articles you now know how to take those first steps towards investing and meeting your future goals. You know know exactly why you should discover how to invest and take action right now!
… investing… directly affects your future and the future of your family
You know that you should be concerned about investing because it directly affects your future and the future of your family. You know that you need to take action now.
What are the principles of investing?
In my first article I introduced you to the basic principles of investing. These were:
- Diversification
- The trade off between risk and return
- Set a clearly defined goal
- How to calculate how much interest you need to earn to meet your goals
- Investment constraints
These are very basic but as you read the articles you learned how to apply them.
How Can You Begin Investing?
I covered the fundamental steps that you need to go through. I mentioned goal setting above. Obviously, you can’t move towards your goal without defining it first. Once you’ve done this you can then compare it with your current situation. This includes your current level of savings and how much you can put aside each month. You’ll then know what interest rate you need to earn and if your goal is realistic or not.
What are the benefits of investing?
The benefits of discovering how to invest is that you will finally achieve a sense of trust that things will be all right. And they will. This is because you will be certain that your future and the kids’ future is taken care of. You will be as certain as possible that you have made a good choice about your future. This is because you will know exactly how to do it.
What I learned from my academic and work experience
In my second article I told you about the key lessons I learned from my academic and work experience. In summary:
- I discovered that it was possible for ordinary people to make profitable investment decisions
- Everyone is involved in finance whether borrowing or investing.
- I learned that having ready access to your funds in an emergency is important
- Even professional investors can make catastrophic mistakes.
- I realized that conservative investors will survive economic collapses
- You can use derivatives to protect yourself from the risk of losses
- You can overcome the fear of loss by investing conservatively and by following basic investment principles
Overcoming investment roadblocks and achieving your future goals
In my third article I spoke about the outcome that I desired and the roadblocks that stopped me.
So, what are the key points? Well for me, like many other people I had never considered my goals. I was investing without really thinking about why. As a result, I made mistakes like keeping my money in savings accounts or selling out of various investments instead of allowing them to accumulate.
… an unhealthy fear of losses held me back.
Additionally, I lacked the basic knowledge of investing. This, combined with an unhealthy fear of losses held me back. Without knowledge I could not tell a good investment advisor from a bad one and I made investments that were probably not appropriate for me.
Fortunately, somewhat by accident, I began buying gold which has been one of my best investments.
The Investment Framework
In my fourth article I discussed how I finally discovered how to invest. I discovered the investing framework. This was as follows:
- Determine your goals:
- Saving for retirement
- If you have a family ensure they have a secure financial future
- Leaving something for charity
- Prioritize these goals:
- Is it important to you that you can maintain your lifestyle in retirement?
- Do you want to maintain your lifestyle while your children and your wife can live comfortably?
- Be more conservative with the most important goals
- Determine how much risk you can tolerate:
- If you used to be a day trader you are probably familiar with risk taking activities
- If you only have a small amount of savings then you probably cannot afford to take major risks
- Based on the size of your goal and your risk tolerance you can determine a realistic return
- Allocate your savings to an appropriate, diversified portfolio that will achieve this rate of return
- Review your goals, risk tolerance and investments annually.
When you follow this framework, you will achieve your goals.
Apply the knowledge and invest for your future!
In my fifth article I spoke about how I applied what I learned. Now that I had this framework I was able to select a realistic goal and figure out how I was going to achieve it. In my case, my focus was on having sufficient money to retire on. I hoped to retire slightly early. I knew exactly what interest rate I needed to earn and I knew how much to contribute. In my case I needed to save about 10% of my income.
In terms of assets, I was fortunate to have a very flexible company pension from which I could pick precisely which funds I wanted to invest in. My company was also contributing about 10% of my income to my pension. That made life pretty easy! If you have access to something like this, you must take advantage of it! It is the retirement “easy button”!
Consider your personal situation
I considered my risk tolerance in light of my personal situation and constraints. These constraints included my time horizon (20 years until retirement) liquidity needs and other circumstances. After this, I was able to pick funds that provided diversified stock and bond portfolios. I was also able to diversify geographically in the US, UK, Europe and the Emerging Markets.
Now I no longer struggled to cope with uncertainty. I felt certain with my choice. And you will feel certain with your investments as well, now that you’ve read this series of articles.
Change your mindset
Part of being certain with your choice is changing your mindset. You must change your mindset to a goals-driven mindset. I discussed this in my fifth and sixth articles. Changing your mindset is costless but it does require some effort. And obviously you cannot just “will” yourself to change your mindset. You have to create the circumstances in which your mindset has no choice but to change. You can do this through knowledge. Knowledge of how to invest and where to invest. That is what I provide here. And as a result, you will find that your mindset changes all by itself.
Next steps for you
So, what are the next steps for you? Well in my seventh article I described how you can do this yourself. Of critical importance is that you go through the above process as soon as possible. In other words, now! Don’t wait until you are close to retirement to start figuring out how you are going to look after yourself.
You have an entire framework to help and guide you.
I have seen dramatic responses in the eyes of my clients when I take them through this process. In many cases they see just how unrealistic their current goals are. It is a real shock to them. But this shock is one of the things that is guaranteed to change your mindset. It’s like a cold splash of water to the face. You may be a long way from achieving your goal. But you now have a plan to bring yourself back on track. You have an entire framework to help and guide you.
How Simon increased his investing outcome by $600,000!
In my eight article I talked about how one of my clients, Simon, was able to apply the investment framework. He achieved stunning results with it! We literally increased his retirement portfolio by $600,000!
How did he do this? Well, with a strong investment framework behind him, Simon was able to make good choices about his investments. He developed clearly defined goals. He realized that banks destroy your wealth! Simply by moving his savings from the banks to diversified portfolios he more than doubled his potential wealth.
Afterwards, Simon told me that “when you have someone to break it down for you and do the hard work, investing becomes easy.” And it can be that way for you too.
Don’t let limiting beliefs stop you…
Now maybe you don’t know how to invest or where to invest. Perhaps you struggle to cope with uncertainty. Maybe you’ve lost money before or you’re worried that your investment will disappear in the next economic collapse. I discussed these and other limiting beliefs in my ninth article in this series.
The point to remember is that these limiting beliefs do not reflect your reality. They are only your subconscious reaction to the unknown. This is fear of the unknown. This is why when you have the investment framework behind you, you can be certain with your choice. The key to overcoming the fear of the unknown is to gain knowledge. The knowledge you have gained by reading these articles.
Investing doesn’t have to be scary…
Now I’ve mentioned in these articles that I’ve spent 20 years in banking and finance, as well as studying it in college, but in spite of that I never really understood investment until I began to truly focus on it. Sometime it seems more art than science. This mystique surrounding investment is in part, what scares people.
The other part is the lack of knowledge. Not knowing how to invest based on grounded principles makes it seem very scary to people, particularly if you have invested before and lost money. It doesn’t help that the media reinforces the fear of investing by both encouraging people to make complicated investments that are not appropriate for them (and then they wind up losing money) or they exaggerate the severity of the crises that occur from time to time.
Take the next step with me…
That’s why I began coaching people on investment. Because I want to undo the half-truths and myths that the media promulgates and really help people benefit from what can be a safe and responsible strategy for meeting their life’s goals. Basically, what we can do is hop on the phone together and we initially talk through your goals and see if there is a way I can help. I do this part for free.
If we both think I can help, we’ll extend the session so that I can figure out what exactly it will take to meet your goals and how realistic they are based on what you are doing now. Then I will explore what level of risk you can tolerate (this is different for everyone and you many find some surprising results). Finally, I will teach you how to invest and where to invest based on your particular situation.
So as a result of my coaching and guidance you will have an investment portfolio that you can feel comfortable with and that will help you reach your goals.
You will feel completely certain with your choices…
When we have finished you will feel completely certain that you have made the best investment choices possible. It will no longer feel like investing is for the professionals and people like you are left behind simply because you don’t know the ins and outs to make your money work for you. You will find good investments in that aren’t going to disappear with the next economic collapse. You will no longer feel afraid to invest your money.
This is an excellent opportunity for you to discover how to invest so I strongly recommend that you take advantage of it. Go ahead and click this link so that you can tell me more about yourself and book a session with me. I’ll see you soon!
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