03 March 2016

Why I want to invest?

It is a common question one will ask why you want to invest. Investment can be profitable or can be destructive if one did not manage it properly. Investor must do their due diligence before they embark into this investment journey. So what are the things that investor should do before they invest?

1. Get educated
Read more on investment related finance books to equip yourself with the knowledge on investment. By doing so, you will be more prepared than those who know nothing about investment and blindly follow analyst report when they give a buy call rating.

2. Ask yourself why you invest
First of all, you have to ask yourself this question. What is the rationale behind this investment? Is it because you want to make your money work harder for you or you work hard to make more money? Don't simply make an investment because the people around you are investing and you follow suit. There is a reason why you invest.

3. Invest on money you can lose
When it comes to investment, always bear in mind that you will lose money. No one can always make money when it comes into investment. It take times to unlock the value of your investment in order to make money. So bear in mind, do not invest on money that you need it in the next 6 months or 1 year.

4. Track your investment transaction
Once you started your investment, keep track on every single transactions you made. Reflect on why this investment make or lose money. If this investment lose money due to certain decision you had made, make sure you do not repeat this mistake again. If this investment make money for you, do not be too happy over it.

Back to the question why I want to invest. Firstly, I do not wish to see my savings in my bank account earning miserable interest from the bank. Due to inflation, the money in your bank will not be the same value few years or decade down the road. You need to invest to beat the inflation. Secondly, by investing I will be able to generate another stream of income to supplement my expenses or to build a bigger nest for my savings. Lastly, by investing for income, I will be able to get out of the rat race if my investment is able to support my yearly expenses. With that I will be able to choose the lifestyles I want to lead before my retirement. If I will to continue to work in order to support my expenses, it will not be a scene I want to see. So start early with your investment, let the time unlock the true value of your investment. The earlier you start, the earlier you can get out of the rat race.

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