What Launched My Success In Investing
You want to be rich. You want to be wealthy. You want to retire young. All of the above are attainable, but there must be a planned path to reach those millstones. The majority of working individuals do not fall into riches or wealth; we have to bust our tails to earn it. The overnight success stories are a façade. No real success happens overnight, it takes endless hours and years to finally reach a self-determined level of success.
It’s startling to know that 30% of Americans have $0 set aside for retirement. Although the percentage covers all ages considered as adults, it is a miserable figure to acknowledge. Individuals in their 20s have an average of $16,000 saved and 30 year olds have an average of $45,000 set aside so far. There’s no need to sugarcoat the reality; those average savings are mediocre. And if the initial goals of riches, wealth, and early retirement are envisioned, then the current average savings will absolutely not get the job done.
Finding the right path that aligns with your lifestyle is all about your long-term goals. Whether the desire is working towards a comfortable retirement, creating a strong second stream of income, or building generational wealth, pinpointing what direction will steer you towards that result will be vital. Your investment style should be identified at this point, so implementing it and selecting the types of assets will follow.
What type of investment vehicles will you choose? Find your niche. The niche is different from your investing style. Different investment vehicles can be: stocks, bonds, mutual funds, real estate, IRAs, 401(k), ETFs, or any other opportunity that allows for upfront money in return for more at a later date. Choose one investable asset to master at a time and be great at returning a profit. There’s no need to deflate potential returns by dabbling in multiple investment vehicles with little expertise in any.
Common niche strategies are: blue chip value stock investing, high dividend paying stocks, contribution matched 401(K) plans, or flipping real estate properties. Some individuals find specifying their investment into particular industries to match their expertise to be simpler and return greater profits. Find a niche that correlates to the skills you already possess or where you believe there is opportunity. If you have experience in the healthcare industry, then dominate that space first.
Once the niche is discovered, it’s important to cultivate a set of goals, for short and long-term marks. There should be stepping-stones to achieve along the way, to ultimately reach the final goal. What is your long-term monetary goal you are aiming for? When you have a level of financial success you are striving for, having targets help not only staying on path, but also mentally seeing results keeps you driven.
Draw Up The Playbook
Having a thought out playbook for obtaining investment success is important. This will help to kick-start your investment decisions and, importantly keep you on the right path throughout the process. Just as playbooks are used in sports, they can be used in investing. In sports the only plays that are attempted on your playbook are the ones that have been practiced and executed routinely. So in investing, only going after asset plays that you have experience with and seen success with should be frequently exercised.
As you build your confidence, then you can ramp up the playbook with different levels of risk, assets, or industries. No investable asset type is going anywhere any time soon, so take your time to master one before you dive deep into several different options. It’s difficult to return maximum gains when there isn’t a strong focus on the details that make up a successful investment.
Your playbook is an outline of your investment decisions, moves, and principles. The strategies that you will focus on for all the investment moves you make should also be within your game plan. Decisions are made based on the goals of the investment. Why is this particular asset the right investment for my portfolio? Will this investment help me reach the goals identified for my future? If the goal is to reach one million dollars in assets, then pouring money into the agriculture industry with zero knowledge of farming is more than likely a gamble.
Create specific criteria that must be met before any money is put into any investment. This can be a strict price target that must be available before it’s acquired. What elements must the asset possess in order for it to be considered a worthy investment? Price matters, value matters, growth matters, but maybe the past performance is simply the past. If the criteria aren’t met, humbly refrain from buying or selling it. The quickest way to ruin your investments is by avoiding your principles or listening to the opinion of others. Everyone has an opinion when it is not their money involved.
Long term investing success is a marathon, not a sprint. It is a systematic, disciplined journey to reach substantial wealth. Remember to map out a set of goals for short and long-term marks. There should be stepping-stones to achieve along the way, to ultimately reach the final goal.
First, write down the dollar value you would like to ultimately reach. Then jot down how much you can currently afford to invest each month. Making monthly contributions is a great method to fuel your investment portfolio over time. After many years you will look up to a sizable amount of money accumulated in your account. The compound effect will have worked its magic.
For instance, say your goal is truly to accumulate one million dollars by retirement, but you have a small amount to invest today because you are starting out in your career. If you were to choose an escalation approach by increasing monthly contributions every year, then over time you would position yourself to invest more as you earn more.
Here’s an example: Your current budget only allows for $100 monthly deposits into your portfolio. From here you could increase the monthly amount by $25 each year. So year one would be $100, year two would be $125, year three would be $150, and so on. Starting with no money before taking on this strategy and assuming an 8% annual return, it would take 38 years to reach the million dollar status. You have reached the million dollar goal you set out to accomplish with a simple and straightforward game plan.
When is it time to be honest with yourself about your future cash flow?
Personal Story Confession
From personal experience, there was a great deal of regret delaying aggressive savings and investing at a younger age. I didn’t wait until my mid-twenties to start saving, but I could have certainly been more forceful with contributions to my portfolio early on. Knowing about the effect of compounding and not exercising the value of it is harmful to our future worth. All it takes is a little more today, to flourish into a sizable amount later. This is something many teenagers and early twenty year olds fail to realize until it’s too late.
Earning an above average salary as a 20-year-old doesn’t always translate into excellent money habits. Trust me. Again, saving and investing contributions were always made, but reasonable allotments were weak. The focus on financial goals exceeding flexible spending wasn’t always the case. The young mind making pretty good money in a big city oftentimes influences the wrong judgement. This is totally normal, however, it is not the best practice if you want to achieve early retirement.
There’s no guarantee that I will always earn a favorable income, so reasonable expectations for a high net worth is purely on the moves made going forward. Any of the aforementioned goals of riches, wealth, or early retirement can still, and will be reached, but a strong focus must always remain. Over the years I have regained momentum to a respectable level, but the “what if” scenario will also cloud my thoughts.