What many people fail to realise is that there is a difference between investments and smart investments.
You need to have the right mindset and the aim to create wealth should underpin all your financial decisions.
To be a smart investor, you should allow your money to do the work for you and not the other way around.
Market volatility exists, but there are a few fundamental tips that are evergreen.
These simple, yet effective, tips are a staple for successful investors across the globe and can help you embark on the journey to achieve financial autonomy.
Set clear and realistic objectives
The primary step to investing smartly is to blueprint what goals and objectives you would like to achieve.
Once your objectives are in sight, it will become easier to gauge how much you need to invest and the tenure you wish to invest for, whether short or long term.
After identifying what you want to achieve, you can explore different investment strategiesfor your goals and how to achieve them.
However, it is imperative to understand that an overcomplicated set of goals through single stream investments can also lead to saturation, not only for the investment and wealth but also for yourself.
So, be clear about what you plan to achieve, the duration you wish to achieve it in and the viability of your objectives.
You can always take a moment to re-strategise if your current plan is too difficult to execute and change your goals to more realistic ones.
Start investing early
“The early bird gets the worm” and investment metrics agree.
When you start investing early, you give your investments enough time to grow through the power of compounding.
You don’t have to invest an exorbitant amount, even simple but safe investments can help you create more wealth for yourself, leading to more financial security in the future.
No matter your age, it’s never too late to start.
Save and then invest
Saving for rainy days is crucial, but to ensure you have enough to sustain your financial goals, investing is imperative.
You can use the 50:30:20 budgeting rule, allowing you to spend 80 per cent of your income on your necessities and wants, while the rest can simultaneously be used for investing.
Moreover, making investments based on borrowed funds is not the right choice.
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You should only invest from your savings rather than relying on borrowed money or loans.
Even saving small amounts every month can lead you to having a big investment portfolio that is sufficient to help you through turbulent times.
Diversify your portfolio
Diversification is key to generating greater wealth.
The concept is simple, yet effective. Instead of relying on just one investment throughout your life, diversify.
This can also act as a safety net in the event of your investment plummetting as other investments will recuperate some of the amount lost.
Seasoned investors know that it is a strict “no” to invest in just one asset class. It is ideal to mix and match different assets.
This not only helps with premium returns, but also ensures better liquidity and helps to navigate market volatility.
Be a risk-taker
Last but not the least, be a risk-taker. You should be courageous and willing to take risks to grow your wealth.
There will be losses, but with the right temperament and mindset, you can learn from these losses and apply the acquired knowledge to avoid market pitfalls.
While being cautious is good, when it comes to investing, it is vital to have the mindset of a risk-taker.
If you are completely hesitant to take risks and do not want to venture into anything that involves risk, you may end up making big mistakes and lose out on a lifetime of gains.
You only need to be focused and willing to invest, and you’re already halfway there!
Shivansh Rachit is board member and founder of asset management company Hedge & Sachs