Author: Ho KhinwaiKhin Wai is a Year 3 Banking and Financial Services student from the School of Business Management (SBM). He started his foray in finance in 2011 and has his roots in value investing. Archives
December 2013
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Why Do We Invest?28/12/2013 Adapted from & Inspired by Adam Khoo. The author does not own any original ideas presented in this post. As you are reading this post, hundreds of thousands of people around the world are currently taking their first board on the 'Investing' train. New investors and traders have sprung up in the markets over the recent years, due to increased awareness about financial management (not to mention the ease and availability of financial resources over the net). There are hundreds of books written about investment and trading. And, many of these books will highlight how to make fortunes from the markets by following their strategies, buying into expensive software programs and attending their supplementary workshops. These programs boast supernormal returns that seem justified with their strategies, and give readers the impression that there is a PROVEN way to make money out of the markets by following them. The result: many people get hooked onto the idea that investing/trading is a GUARANTEED money-making SYSTEM that will reap them easy profits. If, out of the tens of thousands of investors and traders in Singapore, one guy was picked out and asked the question "Why do you invest/trade?", the answer would likely be like this, "To make money, of course". So you see, their motivation for investing is almost always PROFIT-DRIVEN. This is the worst mindset any investor and trader can have, and if you are one of these people, pay attention to what I'm going to share with you next. Their desire and GOAL to accumulate Money through trading or investing is set-up right from the beginning, and that will affect any investment decision the person is going to make. With such a hunger for hoarding cash, he will look for the QUICKEST, EASIEST and FASTEST way to make money, and that may potentially result in him making the wrong decisions because of a thing called GREED. As with any good goal, there must be a proper target. "Making money" is not a viable target as it does not reveal WHY you have to make the money. The goal is much more personal and subtle, and this subtlety is what distinguishes long-term successful investors, and unsuccessful folks who believe in the get-rich-quick ideology. The real goal of investing is about making a positive change in your life, about enriching your personal experiences using the extra income made from investments, and ultimately, about being able to live without financial burden and worries and being able to afford the things you want and living the life you desire. This is what is meant by being financially free. Now the focus is shifted from HOW to make money by investing, to WHY you want to make money through investing. This is the mentality that every investor or trader should have before starting. "Why do you invest?" "To create a more comfortable life for me and my family" "How?" "By making money through investing/trading" Once we get this idea in our minds, we can begin to see investing and trading in a whole new light, rather than just two systems of MAKING MONEY. Remember: Money is a means to an end, and not an end in itself".
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