During a conversation with a colleague they said something that hit me quite hard; “life and investing have many shared lessons”. This got my mind racing and I promised them I would turn that statement into an article. I believe this to be true, life lessons and investment lessons are very similar and I would just like to touch on 5 that I thought really stood out. If you’re just starting on your investment journey you can save yourself a lot of trouble by learning from these lessons the easy way.
Investing is more than throwing money at things
The concept of investing is simple enough. Take money today and put it in a product or vehicle and over time it amounts to more money through increased value. The reality of investing is not simple. Zimbabweans twice have had savings and investments nearly wiped away due to changes in the currency and that is only the beginning. Not all investments are created equal and knowing what works, what works for you and what doesn’t work at all is important. It’s not just putting money into things, it’s about knowing why and how things work for you.
You don’t have to do it alone
While we certainly can do things in life alone it is not the only option. You can ask for help in life, from friends, family and professionals in the areas you need help. Going it alone can work but at times we cannot afford to dedicate the time required to do things well. In investing we can go the journey alone or we can engage asset managers and brokers to help us along the journey. We can leverage the resources at the disposal of these organisations. The best part is, asking is free other services may cost you though.
Know when to fold them
Remember that Don Williams song “the gambler” which advises us “you gotta know when to hold them, know when to fold them”. While it uses poker terminology it speaks about life and how we should know when to hold on to things and when to let go of them. This life lesson is very useful when investing in things especially when we experience setbacks. We have all invested in bad ideas before and the sooner you pull out of a bad idea the sooner you end your suffering. The same is true when investing. The trouble is knowing for sure that the idea is bad which bring us to our next lesson.
The most important question is “why?”
In life, if you know why things are happening you will have an insight into what moves them or the ability to influence or stimulate the desired movements. You get fitter when you exercise so you make a conscious decision to exercise more and get fitter. Simple. With investing the stimuli may not be in your control but the ability to know the causes behind the effects gives you the power of foresight into what influences appreciation or depreciation in your investment. Giving you the knowledge of when to hold them and when to fold them.
The most powerful force is time
Success has many fathers, as the saying goes. No success in life can be attributed to a single thing but one thing that is almost always a feature is time. Grapevines grow for around 15 years without bearing fruit. Yet in the 16th year onwards they have deemed a success. As we grow we learn more things and become better at executing our roles. Investing like life is a game where time is an advantage. Many if not all investment success stories are a matter of time. Yes, even the “overnight” Bitcoin successes have taken many years to bloom. The sooner you start, the sooner time gets on your side.
Investing really has many similarities to life as we live it. In a way, life is a story of investing. Investing time, money, effort and energy into the things we deem important. Results may vary, they often do but done right it is certainly worth it when we look back.