Investing is a brutal game, and only the few savvy and responsive investors make any headway.
Little wonder why there are more gamblers than actual investors today.
In this article, we’ll look at a few bitter truths about investing that will help you see the light and make you a better investor.
Let’s get started.
Most “Investments” are Designed to take your Money and Make you Poorer
The truth is that the majority of investors today are speculators, that is why most of the investments available today are designed for the speculators.
It is essentially a game of who wins and who loses.
More than eighty percent of investments today are designed to take your money and make you poorer.
If in doubt, check your accounts and write down how much you’ve invested this year versus what you’ve gotten in return.
Majority of investors today would record deficits.
It is then left to you to either put your investments in order or to coin a narrative that justifies your wrong investment choices.
You either Invest Money or you Lose it
You’ve probably heard this more than a hundred times.
But I’m taking it from a different angle.
While you can choose to invest or not to invest your money, some so-called investors are choosing to throw their money away.
Whenever you make a choice to invest your money, you are either going to really invest it or lose it based on your investment choice.
So, when next you want to invest in a particular asset or portfolio, ask yourself if you are actually trying to invest your money or trying to lose it.
You’ll always regret an Investment you never made, never a Liability you didn’t buy
“My biggest regret in life was not buying the 2001 Volvo that was in vogue those years.”
Said no one.
When you are left with a choice between investing your money or buying a liability, always know that you’ll never regret not buying a liability.
No matter how luxurious, prestigious, or fun a liability looks like right now, you won’t regret not buying it in the future.
On the other hand, we have millions of people all over the world living in regret today for passing over great investments.
True investors think long-term before investing their money, not based on impulse.
True Assets become more Valuable Over Time
One of the best ways to know if something is worth investing in is to assess if it would become more valuable over time.
Most successful stock market investors know this and that is why they buy low-priced stocks with good fundamentals.
Warren Buffett will always say “markets don’t settle down, they settle up.”
Which means that the price of a good stock will always go up when the market noise settles.
You can’t be wrong if you get greedy when others are fearful or skeptical of buying a good asset at a low price.
You get value over time.
True Investors don’t Chase High Returns, they consider the Risk-Reward Ratio
In investing, greed is good but you must know how to channel that greed the right way.
Every right thinking investor wants to make a good return on their capital, and rightly so.
But then, what is your strategy to make that happen?
Are you just going to close your eyes and chase the big dogs without minding that they could turn around and bite you?
True investors do not indulge every opportunity for capital gains.
Instead they assess investments that could give them almost infinite returns, even if there is some risk involved.
For example, if you had 100million Naira, would you invest in a cryptocurrency index fund that returns 100% annually or partner with a veteran in the hospitality industry to start a hotel chain?
True investors know where they should be investing their money.