Successful investing doesn’t have to be overwhelming and daunting.
Yet the puzzle usually is that many people want to know the most profitable assets or strategies for investment success.
But are these the right essentials to start investing successfully?
Probably not, right?
Because if you want to find a shortcut to get rich quickly, you are wasting your time.
And I’ve observed that one of the best approaches is to slowly build your wealth and follow strategies that have been here for centuries.
Now you may be asking, how?
For that reason, in this blog post, you are going to learn 3 essential steps for successful investing.
1. Never Overspend Your Income For Investment Success
First, let me tell you this.
Why do you think the 3rd stage of the 7 Wealth Stages framework is called Control Personal Finances?
Don’t you know?
Because it is about controlling your cash flow in and out.
In other words…
“You must have control over how much you spend and save. This is the foundation that you have to follow.”
And before you invest, it’s obvious that you need capital.
It is a skill that you develop over time.
A friend of mine recently asked me to borrow a small amount of money. I asked him the reason and he said, he put all of his savings into Forex and lost it.
So what does this example tell you?
It means you must learn financial literacy before investing one single dollar.
In addition to that, have a strong foundation of what money is and what investing means is a must.
And it circles back to the foundation of:
- personal finance,
- master budgeting,
- and then investing.
The truth is most people are bad at saving money.
But don’t make excuses that you earn less than rich people and you can’t save anything.
No, my friend, it is about building self-discipline first and then creating habits. Even if you can save one dollar every week, you have to build self-discipline.
Now, if you need to expand your skills on this topic, we have created a couple of videos and blog posts.
This video will teach you the 7 best tips on how to save money from salary and where to allocate it.
So once you understand that spending less is critical than you earn, you are ready to move to the next step.
2. Successful Investing Is About Learning And Understanding The Power Of Compound Growth
I can tell you something that touches the opening of this blog post.
The majority of people look for short gains, short wins, or short quick rich schemes.
It means they want to hoard money fast.
But that’s the wrong strategy.
Ever wonder why?
“When you study deeper the power of compounding growth, you will see that it’s about exponential growth. And this is the way how intelligent investors think.”
So when you plant that small seed in your investment vehicle that brings a steady compound return, that seed will grow over time.
And guess what will happen after some time?
Yes, you guessed it, it might generate big returns.
This strategy is pretty straightforward but I never understand why people don’t get it.
Because if you invest, then take profit and reinvest it, you lose the power of compounding. You need to keep it growing. Don’t be afraid of market ups and downs. Because you can never go back and plant that seed again in the past. And when you continually take out your capital, then my friend you are not a long-term investor and you speculate. Moreover, you do not understand what compound interest is.
For that reason, if you are serious about investing in the long term to grow your wealth, go and buy books on this topic.
I recommend buying The Intelligent Investor book by Benjamin Graham who was Warren Buffett’s mentor.
This book will give you a deep overview of investing and how positively you can compound your wealth from your savings.
And the last critical step of successful investing is…
3. If You Are In Doubt, Invest In Things You Use Every Day
“Knowing things and knowledge is not enough, and you know it very well. What is inevitable to do is to take it and implement it.”
The same applies to investing.
If you are not sure where to invest your savings in your opportunity account, look around you and observe what things you use every day.
- Maybe, is it your favorite toothbrush and toothpaste brand? Then find out whether that company is publicly traded in the stock market.
- Or you may live in a country where cryptocurrency is widely spread as a payment method. Then allocate part of your savings into several top cryptocurrencies to hold it and at the same time use it as a payment gateway.
- Besides, do you use a laptop or monitor or TV for your work? Look at the brand and if you really love these devices, why don’t you invest in that publicly-traded company?
- Maybe, you live in a particular area with high-demand real estate but don’t have cash or good credit to buy physical property. So search for crowdfunding platforms and leverage the power of the crowd. Chances are, smart investors are also in that real estate vehicle and you can own a fraction of property.
- Do you enjoy the weekends with your favorite beer brand, so why don’t you invest in that brand?
You see, successful investing, in the beginning, doesn’t need to be complicated.
What is critical to do is to understand yourself first and what is your risk tolerance.
Now It’s Your Turn to Start Successful Investing
when you look at these 3 steps, it is really simple.
So your takeaway is this:
“First, control your cash flow in and out. Second, learn the power of compound interest. And lastly, if you are in doubt, invest in things that you use every day.”
Does it make sense?
Now, what was at least one golden nugget in this blog post you learned?
Leave us a comment below.
Remember, at the Pat VC 7 Wealth Stages framework, we are here to create the movement of prosperous Doers to build your professional and personal growth.
Thanks for reading or watching and I will see you next week.