Will You Be Rich?

by Adam on June 9, 2010

There a lot of debate about the power of positive thinking. Some, fans of books like ‘The Secret’, are strong advocates of the ‘think positive’ philosophy, stating that if you project your desires into the ether, the universe will manifest them.

Sounds a bit “new-age” to me.

However I do think there’s a lot of power in believing in yourself and actively examining how you see yourself.

Who are you?

  • Are you a ‘success’?
  • Are you ‘a work in progress’?
  • Are you the type of person who wants to leave a legacy?
  • Are you a ‘Saver’?
  • Are you a ‘Spender’?

How about ‘an investor’?

You may be daunted by the idea of being an investor but hopefully these 4 points will help you get prepared for the first step, to challenge your perceptions and begin your journey towards growing your pennies sustainably through the stock market.

Keep it Simple

Investing doesn’t have to be about filling your days watching the values of stocks going up and down or checking the news everyday.
You can get great returns from simply investing in broad diversified ‘funds’ or ‘unit trusts’ that own large parts of a market. A simple investment of a few of these unit trusts is not only easier to manage but can even lead to better returns over the long term as you don’t lose out to as many transaction fees compared with more ‘active’ traders. This is not to say you should ignore your investments but the message is that simple investing is easy to set up, manage and can even be more profitable over the long term.

Make it Concrete

There’s something truly magical about buying your first investment. Whilst reading about investing and learning the process is definitely worthwhile, it does not compare to actually becoming ‘an investor’.

It is a powerful feeling of making a commitment to your future and starting on the journey to grow your pennies more seriously -to make an investment that will one day turn dreams into reality.

If you are daunted by the idea of investing thousands of pounds into things that fluctuate in value I challenge you to start small and see how you feel. You may find it’s not as scary as you think, especially as you should only be investing with money you don’t ‘need’ so you are not forced to sell and lose money in the short term. Over the long term the likely increased value of your investment makes investing very worthwhile.

Control your Emotions

Whilst investing can certainly be thrilling, the best investing is completely emotionless. You don’t want to panic when investment valuations go down. In fact if you’re still in ‘buying’ mode as those of us in our 20s and 30s are, you should be happy when your investments go down as you can buy more at a lower price.

It’s only when you’re older than a falling market can be disastrous. But by then you should have made simple adjustments to less risky investments to avoid losing all your money.

For those of us in our 20s and 30s though, stock market risk is a non-issue as we’re not selling for decades yet.

Ignore the Stories

If you have friends who are also investing you’re bound to come across amazing stories of investment returns. Perhaps stories like:

“I doubled my money in a month”
“I lost thousands”
“You should invest in China”

You should almost always ignore stories about the stock market (apart from if you read about them on Magical Penny of course!). The stories may be based on half-truths or exaggerations. And stock-tips are almost always purely fiction or the product of a very limited interpretation. Simply stick with a strategy you know and understand (and you will know and understand different strategies very soon!) and keep investing slowly but surely.

It may be lot to take in but these 4 points should help you be an investor yet!

If you believe in yourself and your bright future that is.

{ 3 comments… read them below or add one }

The Other Adam

Hi Adam

I thought it was about time I commented again, it’s been a while! Great post, I’m glad we’re finally starting to break down investing into easy chunks I can understand! It’s something I am interested in, and it’s a bit like information overload when you try find out about it on the internet. Too much information out there, most of which is probably false!

Also ties in a little bit to your birthday present…. Ooooh, what’ve I got you?!?

Keep it up, looking forward to more discussions on here, and in person!

Adam

Hey Ad, thanks for the comment -I’m keeping you in mind as I write to make sure it’s in easy chunks πŸ™‚
I’m very excited about the present: very thoughtful and generous. Intriguing too πŸ™‚

Matt

Hey, just wanted to say this was a really good post!

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