2020 has been an interesting year so far
We went from breaking stock market high in February to a recession in March and entering so much confused in April 2020. This craziness has got a lot of people thinking, WHAT the HELL am I going to do with my Money? I know for sure most folks are barely living paycheck to paycheck. But, IF you were able to have some sort of savings or left some money on the side to invest in something or anything for the matter.
In this crazy time, you don’t want to be the chap who sold everything at a huge loss. We have seen a great sell-off in precious metals, crypto, and other investments, where the average joe’s and jane’s are scrambling to get enough cash as possible.
Investing is the REAL KEY to building Wealth, not saving but you need to save strategically
This is the time in our lives, especially in this season we need to be smart with our currencies in our bank accounts to ensure the safety of our family and loved ones all over the world. So, before you start investing, You need to invest your currencies only when you are ready; Let me repeat myself in a different way, Only invest until you are READY. The keyword is Ready.
Invest with the RIGHT time frame in mind
Secondly, you need to be investing for the long term and it’s the only way to acquire and grow your wealth. We as individuals do not get wealthy by just saving our currencies, We need to invest our currencies if we have a long term goal to become financially confident or attain financial freedom. If you don’t have any savings, then it’s not the time to be investing, you should really need to have an emergency fund ranging from One month to 6 months of your current salary. But it depends on your current circumstances. The reasons you would want to be saving is to not to get yourself into debt if there is a medical emergency or your car is in need of repairs or you need to do some major shopping to deck out your own podcast studio or buy some items from GUCCI…..whatever is your poison of choice.
You should only be investing in money/currencies that you don’t need now. If you are able to save enough funds, then it’s a good step to start investing your income in the long term. When I mention the word long term, It doesn’t mean just 6 months, I’m projecting a timeframe over 1 year and longer.
If you are investing in a company or precious metals or cryptos or any investment funds, you are not basing your investments on the NOW, you are investing for the Future to attain wealth and to rise in your Net Worth. As an individual you want to get data about its past performance, the teams involved, reputation as well as other important information such as macroeconomic indicators, for example, IF you are expecting the economy to goo down into a recession, you would want to increase your earnings to capture more shares or investments which are priced down dramatically, especially with what’s happening right now
You as the individual investor, it’s important to conceptualize for the long term and ignore the short term price volatilities, so as to maintain an optimal psychological mindset, that will allow you to be more logical and not emotional with every red alert news or fake news you receive from a rectangular black box, most likely spewing ridiculous and useless information. If you get yourself in an emotional state, like many folks out there, have sold off their investments with almost 40% loss. You do not want to be that individual, there are incredible temptations out there that will make you too greedy or worse makes you much fearful.
Historically, the economy will recover from the losses and grow towards new heights, it is also the same for strong companies will always recover from the losses and recessions and be able to make a profit and outlast their competition based on strong financial foundations and leadership. Therefore it is important to keep your timeframe for the long term and finally as an investor, you want to be consistent with your strategy, keep with the fundamentals and always keep your mind vigilant from any scams which will find its way to you. It’s important to be consistent, especially for the long term investing strategy.
If you are reading this, I’m sure you are not one of those individuals who have their own investment funds or a team of experts who can analyze, plan and execute investment strategies. Like most folks, you have an income, and you will need to put part of your income for investing; If you are doing that, you would need to develop your own system, which will split your income into various places, such as Living expenses, Savings and finally investments. It’s up to you to decide on a plan and formulate your own percentages to move your currencies to enable you to live but also to benefit from your wealth creation.
Stay CONSISTENT with your investments to build wealth over the long run by building a system with your money
The above-mentioned strategy will help you to keep yourself consistent and the awareness to plan for the long term. This is beneficial as it will build your discipline and raise your human capital as well as further increase your financial confidence through proper financial education. We are in 2020, with so much craziness all around us, we are blessed and favored to have access to various applications that would allow us to Bank, setup online savings accounts and build our own portfolios with our own mobiles and desktops. There is incredible information out there, in which you can search for the best services to meet your goals and handle your currency safely, but at the same time more services out there that can give you easy control without too much of procedures and a vast learning curve.
You NEED to understand CASH FLOW when you’re investing your money
The fourth aspect of investing I would like to mention is Cashflow; there are two ways you can earn cash is through buying low and selling high or keep providing a service to your customers or clients that will help you earn a recurring income.
One way of earning cashflow is into buying stocks into a good company; A Good company should be able to save part of their cash flow for savings or emergencies and use part of their cash flow to invest into the business to increase its overall value and increase cash flow and finally, rest of the cashflow can be given to its owner or shareholders of the business. If you remember most of the airlines have used their cash flow and savings to be given to their shareholders or bought more shares of the company itself, but didn’t use part of their cash flow to increase their savings for an emergency. But, as you know most of these airlines are at the brink of bankruptcy as they are struggling to operate on a daily basis. So as an investor you want to invest in a company that saves & invests back into the business and pays dividends to its shareholders.
Another way to make cash flow is to invest in real estate such as a house, apartments, building complexes, etc. Real Estate is a great investment, where if you were traveling out of the country for a vacation, you can still get rent cheques. I know I’m simplifying things, but you can evaluate and plan accordingly how the real estate investment strategy can play in your favor in generating cash flow. Another benefit I would mention is that your value of the real estate can go up or down, but even still you are getting cash flow regardless.
OWN some Tangible Assets
Other than owning paper assets like stocks, bonds, ETF’s, etc which are easy to acquire but heir values can swing In both directions, depending on the volatility in the marketplace; its important to acquire tangible assets like Gold and Silver, which can be really good to hold in times of crisis, especially with the current scenarios we are facing in 2020. Only time will tell if we will be going through turbulent times or face situations face worse than what we have faced in 2008.
Have REAListic expectations in your investments
One aspect when it comes to investing, it that you as an individual, would need to be a realist. This is because most of the people out there are realists in almost all facets of their lives, but when it comes to investing, people suddenly morph into an optimist. It is great to be an optimist, but you should have the mindset that you can get rich quick and do not fall for getting rich quick schemes; We all need to look into the numbers, the people involved as well as you might need to trust your gut if you have a feeling of uneasiness in particular to an opportunity offered to you.
When you realize that investing is a long term game, then you will make logical decisions and not get caught in the emotions when investing your hard-earned currencies, its also important that I need to mention about the experience I have witnessed, especially in 2017, when cryptocurrencies went high or should say “going to the moon”. The sensation that almost everyone went through was FOMO.
Avoid FOMO which KILLS profits for investors
The fear of missing out, each and every one of us knows this feeling so well and also were victims of it. It is one of the biggest profit killers out there, There were examples I could mention like startups like WeWork, which were values ridiculously as many wanted to get into the startup space, but didn’t really understand what the heck was going inside. You can reflect that FOMO crept in, many folks got emotional and make bad investment choices because of a culmination of fear and greed.
DONT LET LOGIC GET KICKED OUT OF THE WINDOW
I hope you take the above principles and plan to invest in the long term and for heaven’s sake don’t FOMO.