Your Investment Success Now!

OK, so you are looking for the best way to invest money. Well, let’s start with a basic question: what is investing?

Well, an investment is something where you put in (invest) something and you are doing it so that you can achieve a “profit” (usually money). Now you could be (and probably are) investing money. But don’t forget the other things that you will be investing too: your time, your knowledge and, probably, other people’s money, time and knowledge too. So it is not just about putting money in. And therefore, to find the best way to invest money for you, you will need to answer three basic questions:

1.       Where am I now?

2.       Where do I want to get to?

3.       What is the gap between the two?

So, let’s quickly look at these:

Let’s start with “where you want to get to”. And, what I mean by this is “what do you want to get out of your investing?”. So, you might be thinking about questions such as:

• Am I looking for regular income from my investments? Maybe every month?
• Or am I looking for occasional “big wins”? How often? What’s “big” for you?
• Or am I more interested in my investment fund growing
• What return do I want for my money?
• Or am I more interested in making sure that my investment fund is still there whenever I might need it in the future? Maybe it just needs to keep pace with inflation?
• Am I looking at investing as becoming a full time job for me? Part-time? How much time?
• Maybe you are more interested in the fun and thrills of it than the financial rewards?
• Or possibly you have always wanted to learn how to invest in something and your goal is more about learning than getting financial rewards. So you see it as a great hobby?
• So, do you see investing as providing your sole source of income? If not, what else will you be doing?
• The more you think about this the more questions you will be able to come up with. Picture yourself as the investor that you want to become and describe that picture. Write it down. Get it clear.

And, to answer the questions “where am I now?” you will want to answer questions such as:

• How much cash do I have?
• How much spare time do I have?
• What do I have knowledge and experience of
• What am I interested in
• Who do I know that might be able to help me?
• Am I saving money now?

And then, in answering “what is the gap between the two”, consider:

• Do I want to do this all myself or will I ask other people (”experts”) to do some (or all) of the investing for me?
• What is my attitude and approach to risk? What am I prepared to “lose”?
• How much time will I put into investing?
• Who can I turn to, to learn to become great at this?

One of the questions that I put above in the “where am I now” section is “am I saving money now?” I want to stress the importance of this. If you are not following sound “money management” principles and are not saving money now, then you will not be a good investor. Full stop! So, the very first step is to start an automatic savings plan. It doesn’t need to be a huge sum to start off with. 10% of your income would be good but start with as much as you can and make sure that every month, come what may, you are regularly saving. Because, if you can’t keep hold of some of the money that you get now, then you will not be able to hold on to any investment returns and you will end up back where you started. After all, the number one way to make money is to keep more of your earnings than you spend! So get this bit right first.

And, while I’m stressing points, I want to stress another one too. Investing is work! It can be enjoyable work, it doesn’t need to be full-time work, it can be well-paid work … but it is WORK. And, if you are not interested in doing it because you would rather play computer games all day then look for somebody else to do the investing for you. And, before I put you off the idea of investing totally, there are some strategies that you can make very good returns with by only investing less than an hour of your time each month. And, investing can be great fun (in fact if it isn’t great fun for you then you’re investing in the wrong things). But, it is IMPORTANT WORK that needs to be done and, like all work, there will be some things that are less fun than others and, sure, you can adjust your working hours BUT there will be times when your “new job” (being an investor) has to take priority. If you do not approach it in that way then you will lose more than you make and you will fail as an investor.

Sorry for ranting on there but these are important points. Some people (I’m sure you are not one of them) think that investing is a passive activity where you simply drop a bit of money in and you sit on the beach and once every blue moon you take profits out to pay for your bar bill. It’s not! Or, at least, if this is what you want your investing to be, then you need to find somebody really good to do your investing for you and you need to recognise that you will have to pay them well … because you will want continued great returns so that you do not need to think about anything except when your next bar bill is due.

So, becoming an investor is not about giving up work, it is about changing your work from an arrangement where you give up your time for money to an arrangement where you give up your money to make more money … and that takes some of your time to do it well … maybe less than your former “day-job”. When I started investing, I used to travel most weekends around the country looking for good investment properties. That took up heaps of time. In fact it took up most of my time that I was not working. BUT I enjoyed it so I was VERY happy to be doing it. And as I started to make money too, it got even better!

So, finding the right investment strategy is very similar to finding a new job. And, with any new job, you will not be an expert on day one. So, you should expect a learning process up front. Of course, you can accelerate that learning process by using experts to do parts for you or by using effective and relevant training programs. And I would strongly encourage that.

I also have an opinion that you will not really learn how your investment strategy works until you have lost money from it. So, my STRONG suggestion is to start with risking a very small amount of money and get a number of results (good ones and bad ones) before you slowly and steadily grow your risk amount … after you have learned the major lessons. By the way, the amount you are investing and the amount you are risking should NEVER be the same. That is a topic for another day but please, always risk only a very small amount of your investment funds and NEVER more than you can afford to lose. Because, investments are NOT always successful. You will “lose” as well as “win”. The goal is to “win” more money that you “lose”. But, there will be “winning streaks” and “losing streaks”. So, plan for them, and make sure you have experienced them with a very small amount at risk before you move on to increase your risk.

Sorry, maybe I’m making it all sound too much like hard work? Maybe you think investing is not for you after all? Maybe you feel you should decide to enjoy the “day job” after all? I’m sorry if that is the case. That is not my point. Investing is great fun. It can be done (and usually is done) part-time. There are many things to invest in, so you will be able to find one that you are interested in. And the results can be fabulous. And, when you are investing well, you will get a great sense of achievement from watching your investment pool getting bigger. BUT, it is not a way of getting rich quickly and it takes knowledge and skills that we are not taught at school.

So, let’s move on. Let’s say that you are now spending less than you earn, you’ve got an automatic savings plan in place and you are now looking to start your new career as an investor.  You’ve got a very clear picture of what you want that new life to look like and you have a full inventory of your current resources and skill levels (warts and all). That’s great! What do you do now?

Well, 80% of your success as an investor will come from your mindset. The other 20% comes from the strategies, tools, techniques etc. So, strange though it may seem, choosing the investment strategy is not actually the most important thing! Instead, the most important thing is to build up what has been called the “Millionaire Mindset”. So, the first thing I want you to do is to commit to continual improvement. There are many books and training courses that you can use to help you to achieve this. A few of the ones that I know about and can recommend are listed down below. But recognise that this is the start of a journey, not a task to be completed in the next couple of days. A “Millionaire Mindset” is one where you are constantly looking for new sources of knowledge to grow and improve.

But, I hear you ask, that’s all very well … but when do I start making some money? Well, how about now?

Recognising that 80% of your success comes from your mindset, then it actually doesn’t matter too much what strategy you choose to start off with! Yes, I really did say that! The key is to get started and then improve and change over time. And what I encourage you to do at this point is to pick an investment strategy that you already know a little bit about. Maybe that is a simple one like “buy shares and wait for them to go up in value” or “buy a second property and rent it out”. BUT, before you actually start investing real money, then please do two things:

1.       Start researching that strategy. And I want you to start with one point of research in mind … how do I limit my risk? So, if you are going to buy shares and wait for them to go up in value, then find out what you can do to protect yourself when their value goes down. You will probably find (as in this example) that there are many things you can do which leads us on to …

2.       Paper trade. Practice your investing on paper until you know exactly how well (or badly!) your investment strategy works. As you practice it, right down the rules that you are creating for yourself such as when to invest, when to exit from your investment and how much to risk etc. You will learn heaps from this so do it thoroughly. For some investment strategies you can buy software that allows you to practice many months of investing/trading with a few clicks of your mouse.

By the time you have become comfortable paper trading, your research and “mindset building” will have introduced you to other investment strategies. So now you have a choice … do I keep going with the investment strategy that I have practiced or do I go for the new super-dooper one that I just read about in the latest copy of your favourite investing magazine? Only you can decide that. But keep learning and improving and don’t change one investment strategy until you have proven to yourself that the new one is really better for you.

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