Does this apply to you?
A few readers may not see this post as interesting because they don’t believe the topic applies to them at all. “How can I possibly worry about investing when I can barely put food on the table?” they’ll ask.
The answer is simple: practically every single person has the resources with which to begin investing. It may seem impractical for some to believe, but it’s true.
When many of us have a little cash to invest, we might buy a mutual fund or a stock — if we don’t blow it on the latest tech gadget. Oh no! Not the truly wealthy — not the financially intelligent ones. They often put their money in properties, arts, businesses and other investments that the rest of us can only dream of owning. How this rarefied group uses their cash differentiates them from the rest of us.
Building our wealth
In order to build our wealth, we will need to invest our money (I say “our” and “we” because these words are the nuggets I’ve taken for myself). Investing allows your money the potential to earn strong rates of return.
If you don’t invest, you are missing out on opportunities to increase your financial worth. Of course, you have the potential to lose your money in investments, but if you invest wisely, the potential to gain money is higher than if you never invested.
After all, Saving is not so bad if you know what you’re doing
The reason most people don’t save, including the so-called rich, is that they don’t understand how to make money labour for them. They are poor when it comes to “financial intelligence”. Investment starts with saving. Granny always says “you learn to creep before you can walk”. Saving isn’t so bad once you put that money to work, literally!
Regrettably, most people’s initial reaction to life’s situation is to cut their expenses. This can work for a time, but the reality is that you can never cut all your expenses. And let’s face it, cutting the fun things out of your budget is a sorrowful thing to have to do.
Cutting expenses is what the poor do. The rich do not cut expenses. Rather, they ask, “How can I afford it?” The rich, instead of cutting expenses, increase them. The key is that they increase a certain type of expense that will later make them richer.
Even if you don’t have millions to invest you can learn a thing or two about how the rich reap returns and apply it your own portfolios.
Some questions we may ask ourselves are:
1 | What do I do if I don’t have any money to invest?
2 | Is it worth it to begin investing if all I have is $10,000 JMD
3 | Should I wait until I have more money saved or just jump in?
4 | Where should I invest my money to maximize my return?
5 | Are there any other places I should invest my money besides stocks if I’m starting with a lower amount?
6 | Is the strategy for investing the same with a smaller amount of money as it is for larger ones?
The thing is, I was missing a valuable piece of information. It’s not about jumping in with $10,000, it’s not about saving more money so you have more money to jump in with later, it’s about recognizing that nobody in our lives has ever taught us how to invest well. Personally, I have never been taught how to invest. I’m sure I’m not the only one. So, based on the little knowledge I’ve gained I’ll share it with you guys.
You should think seriously about joining an extended family of people who knows how to invest properly and have made crazy money for years from investments such as Warren Buffet. He is the number#1 uncle in the family (lol). Uncle Warren has tried teaching us proper investment for about 50 years. We can literally start our investment education with all the information he has published so far.
We can read some of the other books our other uncles wrote like Mohnish Pabrai. Uncle Mohnish is one of the best investors in the world. He wrote a book called “The Dhandho Investor” (haven’t read it, but certainly will) that seeks to educate one on how to start investing with a very small amount of money and grow it by great long-term investment strategies.
It’s not about the money, it’s about the knowledge
My other uncle is Guy Spier. He wrote a great book called “The Education of a Value Investor” which is entirely on how to properly invest, whether you are starting with ten thousand Jamaican dollars or a hundred thousand Jamaican dollars. It’s simply phenomenal. So, before we think of cranking it up and investing thousands of dollars, we first need to ask “How do I get the knowledge of doing this right?”
Based on what I’ve learned, I have to say the strategy is somewhat different with investing a smaller amount of money. The key is that when you start with a smaller amount of money and you lose it, you can easily replace it. For example, if you lose $5000.00 JMD you can easily replace it than if it were $500,000.00 JMD. Starting with a smaller amount gives more room for one to be more aggressive. We can take more chances that we wouldn’t want to take if we were working with larger amounts. According to uncle Warren “risks comes from not knowing what you are doing”.
The key thing to note is that we make money on our investment capital. If we are buying into anything, we should buy them on sale. Charlie Munger says that there are basically two things we have to focus on, namely:
1 Understand the business /market
2 Buy it on sale (Margin of safety)
How do you invest your money to maximize your return? It’s Simple, buy ten dollars for five dollars and you do that over and over. It’s really not about the amount you are starting with, instead, it’s about the strategy you’re using that’s going to continue to grow that pile over time.
“Create the highest, grandest vision possible for your life because you become what you believe”
Well, this is my two bits. I would love to hear what you guys think and what your investment strategies are in the comment section below.