How To Invest Stress-Free
Time & Not Timing
Investments may be very complicated—tons of books out there, with many opinions. Your friends talk about it, your colleagues talk about it. What to buy, when to buy, how to buy low, how to sell high.
Well friend, let me help you cut all the bull crap and share with you how to invest and sleep at night. This is what I do for my clients and myself.
The common denominator between You, Me, and Warren Buffet is that none of us can predict what the best stock options are. However, one thing that we can be assured of is the continuous growth of the global economy. The population will continue to increase, and people will be more productive as the exponential growth of technology enables us to leverage productivity. Thus, the global economy will what we will be investing in, assuring us of long term growth in our investments. We wouldn't know if gold, crypto, real estate, US, China or India would be the next best country or asset to invest. So why not most of them? Diversify, diversify, diversify. Across time, assets class, sectors, countries, and currency as much as you can.
2. Time & Not Timing
It is known that 90% of investors lose against the index. Trying to buy at the lowest point and trying to sell at the highest. However, we human are emotional creatures. And logically speaking, holding on to our investments would be the right thing to do in the long run would be the best of us. We are not able to take the losses when we see our investments going down. However, if you've got a heart like a stone, such as Warren Buffet, not only is he holding on to his investments, he would buy more when the time is right! (Well, other than his airline's stocks, they were not that good in the first place.)
3. Dollar-Cost Averaging
This is a double whammy in eliminating the habit of trying to time the market, and more importantly, helps you take the emotions out of it. Buying into the market when it's at it's high (not highest)as well as when it's the lowest (when you make the most $$). Dollar-Cost Averaging also instils in you a habit of savings. If you're thinking about investing, you would need to have already the idea of paying yourself first. A rule would be setting aside 50% of your paycheck to yourself and spending the rest on yourself. If you're able to save more, you're another step ahead towards your own financial goal!
4. ABC Profile
ABC stands for Aggressive, Balanced, and Conservative. This "Profile". Describes which stance you should take.
That is high, medium, or low-risk portfolio.
And one should consider how much risk they should take given the time they have, why you might ask—reason being, like what we've discussed earlier. Time gives you more certainty in gaining long term returns. Meaning, if you've got 30 years ahead of your till you need to money for your goals. Right now, it only makes sense that you invest with as many risks as possible. As even in the worst-case scenario, in the lowest point of time in the market, your returns would still be a positive, positive 3%. This is because of the exponential growth that your investments have experienced. However, if you're investing only for ten years, your worst-case Which also means that if you've got a shorter time to invest, the risk of you losing money when you want to cash out is high. Thus, to prevent that, you would need to reduce the risks you're exposed.