Your investment decisions can transform your life. Simply earning a good salary alone will not assure your financial freedom, and bad investment decisions can ruin your capital or even your hard-earned money. Investment can be considered as the important factor that can either make your finances or can completely destroy your financial status. Good news is that you do not need an additional degree to learn how to invest, this knowledge can be gained by just reading few books, blogs and following the investment discipline of any successful business man or finance wizard.
The ultimate goal of the investment is to make sure that your money is actually working for you in the future. Investing is not rocket science it can be understood as simple activities done consistently to make sure that your money will grow in future. The act of investment should not be confined or restricted to only the money that you earn it must consider investment of time on self-improvement as well. People who understand the importance and urgency of investing their time and money will always be ahead of the ones who consider it only associated with money.
“Investment means the act or process of using your money for profit or material result.” The most important phrase to focus on in the definition is “using your money” so the entire result of any investment activity will depend on efficiency and effectiveness of your ability to use your money to achieve your financial goals. So, the first step should be to define your financial goals in a clear manner and setting deadlines to achieve those goals.
The next step should be to arm yourself with the knowledge about investing and deciding where you want to invest your money. In this phase you must quantify how much you are planning to invest and what is the time for which you want to make this investment. Most important characteristic of a successful investor is to know when to enter in a particular segment of the market and when to exit.
This decision of deciding your entry and exit points will not only quantify your expected profits but will also force you to find out and plan your next investment.
Once decided and planned your investment the only thing left for you to do is a flawless and disciplined execution of your investment plan and this is the part where most of the people fail. We will discuss how you can avoid distractions and progress towards your financial freedom by following your investment plan. You can only execute your plan when you can forecast what would be hurdles that you will find in your investment journey and plan a strategy in advance that you need to follow to overcome those hurdles.
Here are some tips that you can follow to create your investment strategy:
- Invest in your self – The most important asset that you have to achieve your financial goal is you. Investing in yourself means that first you need the knowledge or skill set to generate a decent income stream for yourself. During this process of acquiring skills for income generation you must also arm yourself with the knowledge of investing. It will not happen overnight but the output would definitely be worth time and effort. In this digital age you can plenty of books and content that you can use to educate yourself about investing.
- Resist the temptation – Now it is easier said than done. But the difference that you will observe by just learning this habit of saying no to anything that is forcing you to spend unnecessarily will save you a hell lot of money that you can use either in upskilling yourself or planning an investing in upcoming future. You have to learn to simply just avoid expenses that are not necessary.
- Make room in your earnings for investment – Remember we defined investment as an act of using your money so you have to allocate some percentage of your money towards investment. You can use the most basic 50 -30 -20 rule to allocate 20 percent of your earning towards investment each month so that you are making your money ready to work for you in future. It takes time to follow good habits and its you for who you are planning and investing right so it is worth the habit.
- Take a look around- You must be aware of the current trends and must be informed about the upcoming trends or the market niches because trust me an early bird does get the worm. As an investor it is very crucial to find the new horizons which can serve society and can create value for the society those are the market segments for investing in which you should prepare yourself. You never which new venture can give you amazing results and make you financially independent. So, look around, be informed and be ready to find new path breaking discoveries to invest in.
- Plan for emergencies – It is very crucial to take some portion of your income towards an emergency fund because these events will make a big hole in your pocket if you are not planned and prepared for them in future. It is just not about the financial aspect that a person should plan, on a personal level as well you do not want your loved ones to suffer just because you planned to plan for them.
- Take care of your health – It will not seem an important factor but your plans will suffer if you are not productive and for that you should be in good health. Make sure that you have health insurance. Include healthy habits being on budget doesn’t mean that you should not take care of your health. Healthy person has many wishes but a sick person has only one. Allocating money towards a healthy regime and a healthy diet means that you are avoiding medical expenses in future and taking a health insurance safeguards you and loved for any medical emergency that can arise in future.
It is your money and most importantly your time that you are investing for your future goals. No one is responsible for it, so it is your responsibility to be disciplined and focused on your goals. Everyone is motivated and high on adrenaline rush at the start to be the next big thing but it’s only the ones who are consistent in their efforts and willing sacrifice it all for their dreams end up being successful. Remember if you cannot dream you cannot start, but if you are not consistent you won’t finish.
