How you are sabotaging your investment goals

Self-sabotage is when we say we want something and then go about making sure it doesn’t happen.”   

 Alyce Cornyn-Selby 

For most of us, every new year brings the opportunity to turn on a new leaf. We are hopeful that the new year will give us a clean slate a chance to start well what we kept failing at previously. Sometimes we keep getting stuck in a rut. The results we get are not what we set out for. Starting with good intentions, setting out in the right way, and then poof!!! The house of cards comes tumbling down. What could you be going wrong? Today we explore seven ways, where you could be going wrong.

1. You don’t have a plan and just go with what is current.

I cannot overemphasize the importance of a good plan. To me, this is half the battle. The second half of the battle is of course execution. When you do not follow a written down plan, you will find yourself chasing after every investment idea. You will be looking for whatever is the buzz and jumping at every flavor of the month. Let me use one word to remind you what can happen when you are plan-less. Quails!

 2. You are a consummate procrastinator

You probably know what you need to do to reach your financial goals. You even have a plan for good measure. But…. you are waiting to get a lump sum so that you can make a “meaningful” investment. And this lumpsum keeps eluding you.

Meanwhile, others are investing with as little as Kshs. 500 on the stock exchange or have opened a money market account with as low as Kshs. 1000 or my favorite they have purchased a treasury bond with Kshs. 50,000. Rarely do we get money from the deal and when we do it is unlikely that we will be willing to invest the whole amount received.

If you are this kind of a procrastinator, you don’t take advantage of the concept of little by little fills the pot. (In Swahili; Haba na haba hujaza kibaba)

The other kind of procrastinator I have met thinks I’m too young to think of retirement or even start investing.  And this one breaks my heart because time is the greatest ally of the youth. What your Kshs. 500 can do at 20 is so much compared to Kshs. 1000 at 30. Start investing early!

3. Greed

The amount of money that is lost every day because of greed must be mind-boggling. Raise your hand if you have never been approached by someone well known to you who is on the brink of scoring a mega-deal but requires you to put in some cash, first. That is how pyramid schemes thrive.

The idea of quick riches is very attractive and yet it never ends well. You must put in the work. It can get mundane even boring some of the time and it does take time. But if you stick with it long enough, the results will be good. So, keep working at it, stick to the plan, tweak it if you need to.

No Financial plan

4. By failing to reinvest interest and profit

While investment requires time to grow, growth happens when we repeat the process of investing. Exponential growth is experienced when we repeat the process and reinvest our earnings while giving our investments time to grow. Most of us are quick to eat up any gains we receive. 

When our SACCOs declare a dividend and interest income we take up and use them up so fast, retail therapy we call it. When we get dividends from the shares at the stock exchange, we are quick to “reward” ourselves for all our trouble. And yet these gains when reinvested will move us much faster towards financial freedom.

Consider re-investing what you earn, and it will be the x-factor that separates you from the crowd.

 5. Neglecting to read up on current market trends

You have read up and found an investment option that works for you and have even put in some money, and you are committed to continuing investing. Congratulations but it should not end there. You need to keep on checking on the performance of the market and I don’t mean you do it in an obsessed way.  Rather, keep checking on opportunities that could be coming up, periodically.

For instance, if there is a slight dip in a company’s share price, where you are convinced, their fundamentals are still good, then that would be a good opportunity for you to purchase more of the shares at the discounted price. This is because the market will self-correct and most likely the share price will go up later.

However, where you are not aware of the market trends then chances are very high that you will keep missing opportunities to sell-off or buy more of your investments, to rebalance your portfolio.

6. Avoiding money conversations with your spouse

Typical burying- your-head-in-the-sand syndrome.  Where a couple avoids discussing issues to do with the money it may be a pointer to a problem. It is easier to reach your financial goals when you work together towards them.

Money conversations empower the couple for instance to pay off debt faster, save up towards a goal easily and even work on the legacy they might want to leave their children through good financial planning.

When a couple is not open and honest around money matters it can strain their relationship, especially where issues such as debt are not handled well. On this one, I strongly suggest that open communication around money matters should be made a part of everyday conversation and start early even before you settle down with each other. It will save you a lot, literally.

 7. Leaving all the important money decisions to others

No one can advocate for you better than you, yourself. In as much as I am a big fan of unit trusts and pension plans as long as you starting to get your feet a little wet in financial matters, I am a bigger fan of learning the ropes and doing it yourself. Pace yourself.

For instance, learn how to invest directly at the Securities exchange or purchase Treasury bills and bonds directly from the Central Bank . Take an online course, read relevant books on what you want to invest in, get a mentor, ask as many questions as you need; to the right people of course. In short, become a life-long learner and continuously seek to increase your knowledge. Remember even the investment gurus had to start by learning.

We sometimes don’t reach our financial goals, not because we can’t but because the habits that we have cannot allow us to. Today I urge you to go against the grain and starting your financial goals seriously because if you don’t, no one else will do it for you!

Talk to me, I love hearing from you in the comment section.

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