What is an investment and who is an investor? This is not a tough question to answer, however, this question was raised in an executive forum and the answers were not close to the real meaning of an investment or an investor. understanding how an investor deals with his investment and what it takes to be an investor is vital and more important than finding answers to the above question, let’s become an investor and bust some myths about investments.
As described in investopedia.com, an investment is an asset or item acquired with the goal of generating income or appreciation. In finance, an investment is a monetary asset purchased with the idea that the asset will provide income in the future or will later be sold at a higher price for a profit. An investor is any person who commits capital with the expectation of financial returns.
The myth about an investment is that you have to start with a big chunk of money, and trust me that you can start with any amount of money that you have and it can be 10 rupees or even lower than that, in reality, the rupee value of your investment is not so important, the very important aspect of an investment is the mindset and knowledge of the investor, if the investor doesn’t have great mindset and high financial knowledge, doesn’t matter the amount of money, he or she simply going to bust all the money, let’s remember one thing, the important characteristic of an investor is not money, it is mindset, knowledge and confidence of the investor.
Related Read: Art of Making Assets – Rich Dad’s of Sri Lanka
Let’s become an INVESTOR
First important thing to become an investor is to stop worrying about money and start concentrating on financial education, the more you enhance your knowledge the better investor you become, financial education is the foundation of any investor and thanks to our system it is not taught in schools, but it is better than an MBA or a PhD and cost-effective as well, thanks to the internet you can improve your financial literacy from basic to advance without much hassle and expense.
If you want to become a successful investor, you should be able to understand a few elements of investing, you should be able to
- Understand what is debt and smartly using it to wealth creation
- Understand profits and losses
- Understand cash flow and capital gain
- Understand and differentiate an asset and a liability
- Understand employment and entrepreneurship
- Understand different types of investment instruments such as stocks, bonds, mutual funds, real estate etc.
Failure is good, an investor call it an experience
An investor never fails, this can be the biggest lie that you can hear, an investor learns from his failure and the failure makes a seasoned investor who can take bold investment decisions, failure is part of the game and think of your risks and rewards, you will never learn, grow and reach the financial freedom if you are afraid to fail. More importantly, an investor looks for long-term success, there is a big difference between a trader and an investor.
Start with small fish while looking for the big fish
You have to have the experience, knowledge and proper bait to catch the big fish. Start with the small fish to learn and gain confidence, when you are ready, slowly look for the big fish, I mean, take small steps before taking big steps so you will be comfortable and confidence enough to grow as an investor, a small investment can give you the most wanted experience, more importantly a small investment will not hurt your financial even if there is failure.
Great investor Warren Buffett started with a USD 6000 investment which currently stands at USD 90 Billion, and once he said
“The best investment you can make is in your own abilities. Anything you can do to develop your own abilities or business is likely to be more productive.” – Warren Buffett
Not only Warren Buffett but also the top investors of this world started with a very little amount of money, combined with the great amount of financial education and they continued building wealth with experience. You can do the same and let’s start today.