How to score with your investment

So let us say you are Xavi, a Barca midfielder and you find yourself in a unique position on the field. You are in centerfield with no defender in sight and have a direct line to the goal post. To your right in forward position is a Lionel Messi, a fellow striker, and to your left is another equally good fellow striker, Neymar, and very close to the goal post is a Luis Suarez, waiting to get the ball to slot it home.
Now, do you risk making a play for the goal yourself by shooting from the mid-field or do you exploit the remarkable playing styles of your fellow strikers and pass the ball to them to score the goal?
If you’re an aggressive risk taker, you might want to shoot from mid-field and pray the god of football is rooting for you, but if you are a more strategic player, you’ll pass to the other players, and use their unique skills to get closer to the goal before either you or one of them take the winning shot.
In financial planning, there are also different investment options and paths to achieving your goal. The trick is to know the right one that fits your financial goals and your personality.
Your Financial Goals Determine Your Moves: In the context of investing, the wise Greek saying, “Know thyself” is key. Ensuring your investment strategy fits your personality will go a long way in determining your financial success.
While it’s true that all investors want to make money, it is also true that there are many factors that determine the investment path that is optimal for you.
Two key factors involved are your investment objectives and your personality type.
If you’re a young star player just starting out on your career, your financial objectives and goals will definitely be different from a veteran player who is looking to retire. As a young player, you will have more time on your hands, while the veteran will not, so you can afford to be a little more aggressive in your investing strategies.
At the same time, your financial position will also affect your objectives. A successful veteran who has acquired quite a chunk during his active years will have more money to play with, so can afford to put a sizeable amount of money down for a speculative real estate investment.
If you’re just starting your career, on the other hand, you may not want to indulge in any type of speculative investment for risk of losing your growing capital in a deal you are not sure of.
As a general rule, the shorter the time horizon, the more conservative you should be. For instance if you’re about to retire, it’s very important you either safeguard, or increase the money you have accumulated, avoiding as much volatility as possible. So you might want to look at investing in government bonds or other safe investment vehicles.
Conversely, if you’re in your 20’s and saving for retirement, you can afford to be slightly risky in your investment options and put large chunks of your pay check into stocks and commodities. This is because you’ll still have plenty of time to bounce back from losses you may incur along the way, because you have the power of compounding on your side.
Are you a Ronaldo or a Messi: Your style will also determine your investment strategy. Do you love fast cars, extreme sports or the thrill of a risk? Or do you prefer to relax on your lounger, while you read in the calmness, safety and stability of your backyard?
You need to know how much volatility you can stand to see in your investments. You’ll know you’ve taken too much risk when you can’t sleep at night because you’re thinking about your investments.
Your risk tolerance is the major thing that determines what works best for you as an investor. Every individual’s situation is different and an investment is not the same for everybody.
Just like on the field, if you’re not sure of the attackers play, just like you may not know how to react to market movements, call up an investment analyst to help out.
– Wealth Makers Club

Join the conversation

Opinions

Support Ripples Nigeria, hold up solutions journalism

Balanced, fearless journalism driven by data comes at huge financial costs.

As a media platform, we hold leadership accountable and will not trade the right to press freedom and free speech for a piece of cake.

If you like what we do, and are ready to uphold solutions journalism, kindly donate to the Ripples Nigeria cause.

Your support would help to ensure that citizens and institutions continue to have free access to credible and reliable information for societal development.

Donate Now