It is often said that hard work, with some luck, are vital to attain financial stability and success. While we have no control over luck, we do have control over how we work — physically and mentally. More importantly, we can develop the strategies and habits that will take us down the path of financial success. Things to keep in mind:
There isn’t a single saving and investment strategy that works for everyone. No two people have the same philosophies, education, life experiences or financial goals. Because of this, you need to develop a strategy that works for you. Once you develop your personalized strategy, implement it. Review and adjust your strategy as needed.
Stop Looking at History
When it comes to investing, it is common to use historical returns as an assumed rate of return for the future. While this is useful, it is more important to understand today’s trends and opportunities.
Warren Buffett once said “the investor of today does not profit from yesterday’s growth.”
Spend less and save more. Most people are spending more for their ‘wants’ than is rational for long-term financial stability and success. Make sure you aren’t spending money on things that aren’t useful and don’t bring you joy.
Start Early in Life
Your money should get to work early in your life and never stop growing. To maximize your wealth, you need to invest aggressively as soon as possible.
Time is the most important component in building wealth.
Know and Believe In Your Investments
Do your research before you invest in anything. Only invest in things that you believe in and are passionate about.
Ninety percent of my pre-retirement investments were in stock and bond mutual funds. The remaining ten percent was invested in companies that I knew well and believed in their operational strategies and goals. There is more to investing than dollars and cents. A company’s ‘purpose for operating’ and corporate social responsibility were major considerations in my investment choices.
Forgive Yourself and Move On
Anyone who has been saving and investing for any time at all will have made some choices that were less than stellar. That’s just reality — for everyone who is actively saving and investing. The point, however, is to learn from your mistakes and move on doing what you know is right … saving and investing per a pre-planned schedule and strategy.
Even investment professionals make some bone-headed choices. It’s just an inherent component of investing. The only mistake you can make with permanent consequences is your choice to not save and invest.