Each of us will have a more personal reason behind it. The more usual response will be:
- To safeguard your money against inflation (which erodes your money’s purchasing power over time).
- To let money work for you. We only have a limited time to work for money, at some point, our money should also work for us to create more money (interest, dividends, capital appreciation etc). At some point, our money should work harder than us.
- To be financially free. To secure a comfortable future. To have a richer life. To use our God-given resources and talents. To have more than enough to share with other people and bless them with richer lives as well.
Whatever your motivation may be, all we know is that every Juan should invest, and every Juan can invest. Now here is the S.M.A.R.T way to invest:
Warren Buffet’s rule #1 is: “Do not lose money.” Don’t be reckless in investing. Since there is opportunity to gain in investing, there is also opportunity to lose. That’s why many people don’t like to invest because of fear of losing money. But if risk is properly managed, the chances of your investments growing outweigh the downside risks. Besides, not investing your money is a sure way to lose money (due to inflation). Here in investmentjuan01, we always ask you to pair each of your investments with O-H-A (Objectives, Horizon, Appetite). Invest according to your goal and objectives. You manage risks by educating yourself of the various investments (like which stocks you purchase), or letting experts do the investing or you (like buying various mutual funds or UITF, which suits your OHA). As others say, Aral muna bago invest. You manage risks by having the proper time horizon.
Aside from staying invested, a smart investing technique is to invest regularly, in fixed intervals. Not one time big time, but regularly, in comfortable amounts. This makes Juan disciplined in handling his monthly paycheck and later on he won’t even feel the amount he invests, the amount leaving his salary for a good cause. Through investing regularly, Juan is able to take advantage of cost-averaging, being able to buy in the highs and lows of the market, hopefully to end up with a lower average price than market value (hence a gain).
Seasoned traders and investors might have reservations with regards to this because they themselves are more familiar in timing the markets (position trading), and because they can outperform the returns of cost-averaging. But not everyone can be like them. For newbies (or those who neither have the time to monitor the markets nor the skills and confidence to frequently buy and sell), cost-averaging through regular investing is highly recommended. Personally I do this for my VUL and UITF, then I do position trading in stocks. Online brokers (COL Financial, among others), mutual funds, and banks (UITF) also have programs to cater to regular investing (easy investment plan, monthly investments plan, whatever they are called), some even through salary deduction. They want to make investing easier for every Juan so do take advantage of those.
If you care about your future, if you want a richer life for you and your future family, invest. Invest the smart way.
For highlights and notes on the COL Financial SMart Investing 2016 summit, click here.
May we all have a richer life!