3. KNOW THAT YOU ARE THE KEY TO YOUR FINANCIAL FREEDOM
You must learn how to put your money into profitable investment such that it will bring in multiple streams of income into your pocket. A true investor is able to evaluate his or her possibilities of making or losing money in an investment. Using all his or her knowledge available, he or she can tell. Investing successfully is by no means a complex issue, it requires time, financial knowledge (literacy), experience and a large amount of self restraint. Anyone can consistently make money from any invest market if he or she sticks to the above mentioned parameters.
To make successful investment trade, an investor has to take into account technical and fundamental data and make an informed decision based on his perception of the investment market sentiment and expectation. However, timing is the most important variable in making successful investments. An investor is an asset to his investments when his decision brings in profit on consistence basis and he is also referred to be a liability, when his decision affects his marginal productivity of his investments which brings in little or no profit. Thus, for an investor to be classified as an asset, he requires the following;
Investment Plan
Unless you have taken time to write down a set of rules that you can and will follow, its likely you will remain unfocused and directionless. Make a plan, have rules, follow them, set goals that are realistic and you will achieve them. In your investment plan, you must categorize which investment is a long term investment and which is a short term and stick to them. Your investment plan serves as a yardstick to measure if you are making progress or not in your investment portfolios.
Investment literacy and education
Increasing your investment knowledge and literacy through attending of seminars and reading of books on specific investment portfolio you are into or about going into is also a vital requirement for any investor. Money invested wisely will diligently produce more money. Like I said, when you invest money, you are sending it to do some work for you whether in your presence or absence. Money will always work for you if you invest it in a good opportunity. For you to invest your money wisely, you need to know in detail about the investments you are about to put in your money, how you will get back your money if things don’t go as planned. This is why financial education serves as the first step to entering into your financial freedom, because when you know how money works, you will definitely know where it works best.
Donating 10% of your income
You may wonder why this is necessary in the investment market but the truth is, it is applicable to every facet of life. It is a pre-requisite of making and keeping wealth. The most important thing in life, if you want to generate wealth, is to donate at least 10% of your income regularly and the keyword here is regularly.
Since I started donating 10% of my income, I would not say I have never been faced with situations that require finances but somehow, I have always found a way around solving it. I can tell you from the experiences of some very wealthy people that I have read about, unless you practice donating at least 10% of your income, life is a lot more difficult. Donating 10% is like a magic trick of attracting financial ease and luck into your life. I urge you to visit bookstores or log onto the internet and search for your favorite wealthy men and women, read their profiles and you will see that the secret to their lasting wealth is in donating at least 10% of their income. Personally, I believe that if you donate at least 10% of your income is the number one principle to your investment success. If you do it, you will attract the right sources of information at the right time, to help you make proper investment decisions and your instinct will become sharper.
Conversely, an investor is considered to be a liability if he has;
Knowledge deficiency
Most investors do not take their time to learn the basic fundamentals of every investment they are into or about to go into. This makes them take the wrong decision at either the right time or the wrong time, thus, losses money and put their blame on the government or the economy. Recent statistics show that 96% of all investors in the investment market do not understand the investment basics of their portfolio. This is why, for most of them, their odds for making money in the investment market are slim to none. Never invest your money in a business or in an investment you don’t know or understand its basics or follow the advice of an unskilled and inexperienced person in that line of business or investment. Money invested under the careful advice of people who are already succeeding in your line of intending business or investment will be cautiously protected. Even, the scriptures urge us to follow those who through faith and patience obtain the promise. When you seek for advice on a particular business or investment venture before you put in your money, you reduce the chances of losing your money.
Lack of investment plan
Lacking of planning is the number one reason many investment business fail. Investing without a plan is like investing for wrong reasons. Most of these investors invest solely to make money. I know every investment is supposed to put money in your pocket but that is not enough reason to invest. It is the investment plan that carries your goals, target and reasons. This makes you understand what you are really going into. Before you start any investment business, you need to know what you are going to do and how you are going to do it. If you don’t, your new investment business will run into trouble as soon as you begin allocating your limited resources. You will wind up spending your time and money on those things that seem to need immediate attention but have no real bearing on your long-range business will suffer because you will not have the groundwork to address them and your available funds will have been depleted.
After all, a true investor is not only after getting money from his investments but in building a large investment empire by converting his earned income into passive and portfolio income generating investment.
For instance, in the stock market, you might want to take into consideration which sector/industry a stock trades in. if you trade a smaller subset of stock from the list, you may want to avoid trading stocks that all trade in the same sector, because we know on certain days all storage stocks or all chip stocks will move together as a sector. By mixing your sectors, you have a less chance of getting caught on those days when one whole sector moves against your trades. By this I mean, trading one particular type stocks of a sector, you are exposing yourself to unforeseen danger. Let’s say, you buy shares in the banking sector. The shares in the banking sector are all influenced by the same factors thus, a change in one of those factors positively will lead to a positive return and vice versa. If these factors influence the sector on the negative aspect, you could have a little or no returns from your stock. I call this situation a win it all or lose it all principle. It is equivalent to gambling in a casino.
You must understand that the odds of one sector favors another sector in a stock market as such, a true investor does not invest in only one sector of the stock market but in two or more sectors. Thus, he/she has already stroked a balance against the odds of the stock market. When one sector is down another is up. I am not here to talk about stock market, but I only used it to explain this basic rule of investment.
So, this is one of the reason true investors do expand their portfolios to cover different sectors of the economy. Remember, an investor who diligently follows the plan always catches the run. To know more about the fundamentals of trading the stock market, follow the link below
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4. BE PREPARED AT ALL TIMES FOR OPPORTUNITIES
A true investor focuses and keeps in mind what others are already looking for. The difference between a true investor and a non-investor is that a true investor is always prepared for what and when things will happen. If you want to buy stocks, then attend classes on how to spot bargains in stocks. Being prepared begins with training your brain to know what to look for and being prepared for the moments the investment is presented to you.
OPPORTUNITIES – HOW TO RECOGNIZE IT
The word opportunity means favorable time, occasion or set of circumstances. Many people in life lose a lot of good opportunity that comes to them. They do not only waste their money but also waste their lives, resources and opportunities. One way that people lose opportunities that comes their way is by being extravagant. When you live beyond your means or spend money in excess, you have an extravagant lifestyle. This is a waste of opportunity.
When preparation meets opportunity, people call it luck. Opportunity waits for no man. The first step towards meeting an opportunity is always a difficult step but if you do take this step, it becomes your most important step in your journey towards financial freedom. Just like in chemistry, where the rate limiting step of any reaction is the first step, once this step is overcome, the reaction will definitely yield the required results. Likewise, your first step towards taking a financial opportunity (investment) while determine your financial life.
Your first step in taking up a financial opportunity changes you from one who works for money to one whom money works for. A man who does not step quick when an opportunity comes is a very big procrastinator. Procrastination is the fertilizer that makes difficulties grow, it is an opportunity’s natural assassin. It steals a person’s time, productivity and potential. To attract good luck to yourself, it is necessary to take advantage of good opportunities. Action will lead you forward to the successes you desire, thus men of action are favored by good luck.
