You (Yes You!) Can Be a Kick-Ass Investor
Photo courtesy of scott feldstein
No matter where you’re starting from, you’re just a few steps away from kicking ass and taking names in the arena of investing.
There’s no need to feel intimidated. This is actually pretty simple. And I’m not simplifying it just to make things easier on you. It really is this simple.
The challenge with investing isn’t the technical skill required to do it. That’s pretty minimal. The challenge with investing is the mental challenge of believing in what you’re doing and sticking with it.
I want to help you with that. I want to show you how simple it can be to use investing as a way to reach your goals. I want you to know that you (yes you!) can be a kick-ass investor!
Here’s how.
1. Keep the focus on your goals
Kick-ass investors know that only one thing matters: your goals.
Kick-ass investors know that all those things that other people like to focus on, things like what returns they got last year, whether they beat the market, and what stock “their guy” says is the next big thing, are irrelevant. They’re just distractions. And actually, they’re much more likely to do harm than they are to do good.
You’re not investing to get better returns than the next guy. You’re not investing to impress your friends or co-workers.
You’re investing because you have important goals and investing is one tool that can help you reach them.
Keep your focus on those goals and let them drive your investment decisions.
2. Invest regularly
Kick-ass investors know that the most important part of their plan is the money they contribute on a regular basis. The more money you put in, the more it will grow.
In fact, when you start out the amount you contribute is MUCH more important to your success than the return you earn. Which means that even if you don’t feel like you know what you’re doing, it’s STILL better to start than not. Any mistakes you make just don’t matter that much as long as you keep investing and learn along the way.
Here are two tools that will help you get started making those contributions:
3. Keep costs low
It kind of seems silly that with all of the things we like to talk about when it comes to investing, something as simple as cost can be the one that matters the most. But it’s true.
There are several types of costs to watch out for:
- Mutual fund costs – All mutual funds have something called an expense ratio, and the higher the expense ratio the higher the cost of the fund.
- Trading costs – Costs associated with buying or selling an investment.
- Taxes – Selling an investment, even if you’re using the money to immediately buy a different investment, can have tax consequences. This can be a big drag on returns.
- Professional fees – Paying a professional to manage your money can be a good idea in certain situations, but there’s also a cost involved. Make sure you know exactly what you’re getting for your money.
Here’s a good resource with more detail on the costs to watch out for and how to manage them.
4. Keep it simple
Investing doesn’t have to be complex. In fact, the best investment strategies are actually pretty simple and, honestly, kind of boring when it comes right down to it.
But kick-ass investors know that “simple” and “boring” are not bad words. They remember that this is really about achieving their goals, not trying to ride the wave of the latest investment fad. If the route to achieving those goals is a little dry, so what? Sometimes it’s simplicity itself that brings joy.
Good investing is simple and effective. Here’s a comprehensive guide to doing it right:
5. Stay consistent
One of the reasons why many investors struggle is that they keep switching strategies. Every bump in the road causes them to second-guess their approach, and they end up switching back and forth so often that they never give any single strategy a chance to succeed.
Does that kind of inconsistency work in other parts of your life? Can you teach your children how to behave by constantly changing the rules? Can you do your best work if your boss is constantly changing what she expects from you? Of course not.
Success is never guaranteed. But the best way to give success a chance is to live by the principles above and stick with them through the ups and downs (and yes, there will definitely be both).
It will take plenty of courage to stick to your guns when everyone around you is freaking out. It won’t be easy. There will be plenty of times where you want to bail.
But kick-ass investors know that consistency is key.
So what do you say? Are you ready to kick some ass?
