The concept of ‘enough’ is so critically important when investing, yet so few investors consider it.
Most investors I see are investing their spare cash in a random mix of assets that they like, trying to achieve the highest returns possible.
Whereas a rare few, are so worried about volatility or high prices that they don’t invest anything at all. They sit on the sidelines waiting for their opportunity that may never come.
In either case, most investors are either taking on more risk than they need, or less risk than they should.
Most investors start off with a goal to “make more money”. Yet they don’t have any specific idea of how much they want. Maybe a vague general idea at best. The difference between what you want and need could be hundreds of thousands, or more.
It’s so important to clearly define what your goals are and how much money you need to achieve those goals. For example, my main goals are to build a new house more suitable for the family, and to have enough saved to slow down to part time in the next couple of years. I know roughly how much I need to save to make me comfortable to achieve these goals, so that means I also know how much risk I need to take on with my investments.
Personally, I put far more weight on how much I can contribute to the markets, than how much the returns are going to be.
Because of my planning, I know I don’t need sky high returns to achieve my goals. So I don’t need to chase any highly volatile hot stocks (ahem Tesla), funds (ahem ARK) or assets (ahem cryptocurrency and NFT’s). Sure, they could make the journey faster, but they could also make it much slower. I don’t need to take the risk to find out.
Many people see how others are investing and take their cues from them. But they could be playing a completely different game than you. Their goals, investment timeframes, tolerance for risk and personal situation is not the same as yours. You need to know your goals. You need to know how much money you need and when you need it by.
The more intimately you verbalise these things, the better an investor you will become. Not taking on more risk than you need, nor taking on too little. Being too greedy is just as likely, if not more so, to slow you down, than it is speed you up.
Stop being so aimless and learn your ‘enough’ point. If you are like me, this amount will change over time too, so perform an annual assessment of your investments.
If you need an investment plan or recommendations , then get in touch today.
The information contained on this site is the opinion of the individual author(s) based on their personal opinions, observation, research, and years of experience. The information offered by this website is general education only and is not meant to be taken as individualised financial advice, legal advice, tax advice, or any other kind of advice. You can read more of my disclaimer here