“ The big money is not in the buying and the selling, but in the waiting“
Charlie Munger
Take off or landing which is your absolute worst? For me, I can’t stand take-offs, give me a landing, even a bad landing any day. But what excites me is usually moments before landing especially at night when you see the beautiful lights, lighting up the city. The view is typically breathtaking. I usually can’t wait to explore the city. The bird’s eye view gives one an appreciation of the whole town, however, it is unlikely that I get opportunity to visit every corner of the city. I use this analogy to say a bird’s eye view gives you an appreciation of the full scope of investment options that are available to you. Since resources are scarce then you must be intentional about where you apply those resources. You need to develop a strategy for your investments.
I’ll delve into 11 reasons why it is crucial to be strategic about your investments:
You will be focused on your approach.
The discipline of focus is a superpower. Being laser-focused on your goals even for short periods can help you achieve so much compared to when you are chasing the wind. Singular focus builds momentum.
Reduces a lot of time lost in experimenting.
Don’t get me wrong, experimenting helps in innovation. However, it is possible for one to always be in the experimenting mode and never really get anything done. Worse if you are trying to “get your niche” it is possible to find yourself in disarray because your time has passed and yet you have nothing to show for it.
The trick here is to choose what you want to set out a pilot check and assign a time frame for when you need to make your decision to continue with the project. When piloting, start small and move fast.
Benefits from compounding and capital appreciation, without jumping from one investment to another.
When you lock in your investments, especially over a long period of time you are likely to benefit from the power of compounding. This is the true meaning of your money working hard for you.
For instance using the investment rule of 72, and your investment earns you 10% per year then it will take you approximately 7.2 years to double your investment. This goes to show just how important it is to stick with a good investment plan.
Reduced loss of funds chasing shiny objects.
This has got to be the single biggest vice of being an adult, chasing after shiny objects.
I know, that’s a bold statement but let me explain myself. I have found that for the most part, people tend to try to find the path of least resistance, and so just as “shiny objects” are attractive to the eye, we tend to chase after them for two reasons.
One, because they are attractive, someone tells you to invest with me, and you will double your investment in 12 months. You then lose yourself and want to invest without checking the fundamentals of that investment.
Secondly, the shiny object promises to be the one thing that gets you out of a tight spot. Of course, you will soon discover that this is just a tall tale.
And so if your eyes are locked on what you want to achieve you do not have time to wander about without a purpose.
Able to attain financial freedom faster than peers who are not strategic.
I know I talk about not comparing yourself with your peers because it is the surest way of getting unnecessary pressure. However, being strategic means, you can listen to what is happening around you, filter out what is useful, and discard what is not.
Even after assessing what is useful, you have to go the extra mile and do some due diligence to see whether an investment option works for you or not. What you will find is that you will move towards financial freedom much faster, than those who are not strategic.
Secure a future in retirement with solid investments.
By now we are clear that retirement planning starts the minute you start earning some form of income. As I usually sing, hope is not a strategy in retirement. Being strategic will require you to execute a consistent plan for your retirement. Retirement requires cash-rich assets and if you plan early, it is possible to accumulate a good number of these assets that will fund your lifestyle.
7. Accelerate any debt repayment.
With a good strategy, you will be able to focus and pay down debt as soon as possible. Debt especially the consumer kind is not desirable because it takes away from you the income you require to accumulate good assets.
If you are in debt you will require a good plan and consistency to pay it off. Being strategic means finding the best ways to extinguish the debt and pay down the debt. A long-term view will enable you to endure short-term discomfort for the sake of a good future.
8. Able to take advantage of opportunities because of having some financial muscle.
Have you ever missed an opportunity because you were overcommitted, or cash-poor? Being strategic with financial plans allows you to develop financial muscle to not only face emergencies but also to take advantage of investment opportunities that come your way.
9. Secure future for family
There’s nothing that gives such peace of mind than to know, you have arranged your affairs in such a way that you have prioritized your family’s financial well-being. And here I don’t mean having it all together, far from it.
Working your way towards generational wealth creation is a journey, it matters a lot that you are on the correct road. The idea here is to keep working on your plan, and I know I sound like a broken record but being consistent is key.
10. Able to be intentional in your giving.
Giving is acknowledging that you live in a community in which you need to contribute to. It is the circle of life. But let’s face if you are struggling, giving can be burdensome. Small wonder that some of us have locked our numbers such that we cannot be included in the WhatsApp groups that require contribution for one reason or another.
When you are strategic with your investments, you are likely to know what to give and you will also have your limits. This ensures that you don’t give too much that you are not able to stick to your own plans. Being strategic also ensures that you have enough that you can give as often as you like.
11. It will influence other areas of your life, positively.
Habits influence us as whole persons. It is rare that you will be doing so well in only one area of your life. Once you cultivate good financial discipline, it is highly likely that this discipline will be seen in almost all other areas of your life, helping you achieve all your other goals.
How are you planning to be strategic in your finances today? Talk to us to assist.
Great stuff, Madge
Thanks LM!