You might have won the lottery or been born into wealth. But for most people, getting rich is neither quick nor easy. It takes planning, knowledge, and wise investments. Coming as no surprise to anyone over six, it also tends to take money to make money. For many, this is where the wheels come off.
There are several ways to get the initial money needed for a major investment. You can ask your rich uncle for some seed money. Just be warned that rich uncles didn’t get rich by loaning money to their poor nieces and nephews. You can dip into your trust fund. Of course, if you have a trust fund, you probably don’t need the investment in the first place.
You can always go with the fisherman’s solution: How do you catch a big fish by using a little fish. You can take a shot at the big investments when you have successfully converted a few small investments. That first small investment could be funded in several ways, including a cash advance, a side hustle, or selling a few items you no longer need. The first path to more innovative investment is to stop overextending yourself by seeking opportunities you can’t afford. Start small and take the following advice to heart:
Don’t Confuse Wish-casting for Investing
Investing in a company because you like them and want them to succeed is no more intelligent than betting on a sports team just because you like them and hope they win. This is a recipe for going broke. It is not a strategy you can afford. It is not a strategy at all. It is just wish-casting. In the world of investing, that seldom ends well and is indistinguishable from gambling.
The question of whether it is too late to invest in Tesla will not be resolved by how much you like the company. The reverse is also true. You should not simply avoid investing in a company because it rivals another company you like better. None of that has to do with investing.
It is not about whether or not a particular company wins. It is only about whether you win as an investor. Companies aren’t teams that you pick because you like their logo. This is not to say that you cannot have companies you like in your portfolio. You just have to give them close, dispassionate scrutiny every time.
Don’t Treat a Hot Tip as Research
There are many reasons you should avoid hot tips when investing. Perhaps the best reason is that a hot tip is not the same as research. It is merely a shortcut. Taking investment shortcuts usually leads to disaster. If you are going to trust someone to do your research for you, at least utilize the services of an established financial advisor. Try to find an advisor who is not paid commission and only makes money when you do.
The investment grapevine also yields a bumper crop of scams daily. People pretending to be your friend are always looking for naive marks who will place their greed over good sense. There are no substitutes for research. If anything about a potential opportunity makes you feel like you have to act before completing due diligence, walk away.
Think Long Term
Even if you do your research, you are taking on a lot of additional risks when investing for a quick turnaround. Good investing is usually tediously dull work. It is not exciting and takes a long time to produce significant results. That is not to say that you should never take investment risks. They just have to be measured risks. Some portion of your portfolio should have assets that produce fast results. But that risk should be more than balanced by long-term, high-stability properties.
If you get into the investment game because you are desperate for a quick infusion of cash, you will likely make many costly mistakes. This is not the stuff of long-term wealth. Long-term, stable wealth requires long-term, stable investing. Keep your eye on the prize and steady as she goes.
No investment advice will guarantee the outcome of wealth. But you can’t go wrong by removing the emotion from your investments, always doing the research, and thinking long term.