Investing is a time-proven way to build wealth and provide yourself with passive income. But it can also provide you with skills and knowledge that can help you a lot in life. Let’s take a look at the things I have learned from investing.
1. Vision for the Big Picture
Before investing in a given company I make sure to always do a good Research. That includes figuring out how the business works, how it is making money, who are their customers and their competitors.
That also helps a lot when I am going on a job interview and all of my interviews so far have been going well. Why?
It is because I am used to make a good research at a given company and when I go for a job interview I can see how their business makes money, who are their customers etc. That puts me well above the crowd of candidates because they can see I am interested in their business and I understand how everything works.
And yes investing can help you for job interviews no matter for which position and which industry you are applying for. After all you are going to work for a certain business and all of them want to make money. For example I am a chef and still this has helped me a lot for interviews.
It is also a plus that during those interviews you can see if a place is a good fit for you quicker than most people for those same reasons.
2. Think Like an Owner
You probably know that if you buy even one share in a given company you become a part-owner. Yes in most cases a very minority owner, but still an owner. To have any success in investing you shoud act the same no matter if you have one share or the whole company. If you do that you are quickly going to start thinking like an owner of a given business. But how does that help you in life?
Well first this helps you for promotions at your job. If you have this approach you are probably always going to do the best thing for the company you are working for. You will probably also have good ideas for things that might be changed to provide more efficiency or more revenue for example.
Those things are not going to stay unnoticed as they provide value for the company. That makes you a more valuable person for it. When you are more valuable they want to keep you. That means that they are going to offer you a pay-rise or a promotion when the time is right.
Of course there are exceptions from mediocre companies with incompetent management that are not going to do that. But if you are a decent investor and have done your research you would not have been working there anyway.
I don’t have that much of a work experience, but I have noticed that I have been highly valued at all the jobs I have worked so far. In fact at my first more serious job they wanted me to stay as a kitchen manager even though I was 21.
3. Managing Risk
Having your own Stock Portfolio means that you have to manage the risks in it by choosing the right stocks, sectors etc. You should be able to determine the risk-rewards of a given stock and whether or not the risk is worth it. But how can that help you in life?
Well that can help you a lot when making hard or not so hard decisions. For example if you are thinking of moving to a different city or a different country. Being able to calculate the risk-reward of such a move can make your decisions much easier.
It has helped me a lot during the last couple of years when I had to make some hard decisions. What most people do is that they focus on either just the risk or just the reward. This bring either greed or fear, as you should know none of them are a good friend of yours. You need to weigh both risk and reward in order to come up with a good decision, taking emotions out of the equation.
I will try to explain this with my example. As some of you know I moved to the UK when I was 20. So before I decided to go let’s say I just focused on the risks. That would have made me too scared and too uncertain and I wouldn’t have gone anywhere. Looking in hindsight that would have been a mistake on my part.
Focusing on the rewards only would have made me have wrong expectations and I would have probably gone back home in a couple of months. That would have also been a mistake looking in hindsight.
How investing helped me is that I was able to manage the risk and reward. I have made a balanced decision and had all the risks and rewards counted. That made me take the best decision at the given time, taking all the emotions out of it.
4. Entrepreneurship
As you research a lot of companies you start looking at a lot of different business models. You see good ones, you also see bad ones. That can help you a lot if you want to have your own business one day. First you will have a lot more ideas and second you will have a lot more approaches when starting a company.
Knowing things like how to use leverage, what is a competitive advantage or how to brand yourself is going to be a big plus for your company. It doesn’t matter if you are starting a small coffee shop or some big multinational tech company – the principles are applicable in both cases.
5. Value of Money
Once you start building your portfolio you are going to value the money there in a very different way. When you see how your investments are making money you will not want to just withdraw them to buy something you don’t really need.
Having the cash just sitting around in your bank account makes it much easier to be spent. Here is how I see it:
Credit Card Money
Those are the easiest to spend. When you have money that are essentially not even yours you find it much easier to spend them that way. Of course once you do you have to give them back with interest, which plays against you.
Cash/Debit Card
Those are a little bit ”harder” to spend. I find myself thinking a little bit more before doing some sort of an impulsive decision. After all you have worked for the money and you don’t want to spend them for something you might regret later on.
Savings Account/CFDs
Here we go a step further. After you have moved the money to a separate account you will unconsciously use them for more specific purposes. Also getting a small interest encourages you to keep them there.
Brokerage Account
Here is where I am trying to funnel money and not take any out. Once I put money into investments I try to leave them alone. As you know time is on your side with the power of Compound Interest.
This kind of change in mentality provides me with the ability to build wealth. After all you build wealth by acquiring assets and not liabilities. By spending your money on things you don’t need you end up acquiring liabilities.
6. Patience
As you know Investing is a long-term game and if you want to get into investing you just have to be patient. This is not the kind of thing that you can just push and see the results straight away.
I have said it before, but for me investing is like growing a garden. Let’s say you want to have a garden with walnut trees. Those trees take 8-10 years in order to fully develop. You can either be patient and provide them with all the conditions for them to develop. Or you can start rushing around after a year or so and destroy your garden.
This thing applies in life in a lot of aspects. Usually all the bad decisions we take are the rushed ones. Success comes over time and everyone that is not patient is just not going to achieve it. It doesn’t matter if you are a football player, a musician or an accountant. No one has become the best in their field overnight. It takes patience and dedication.
7. Discipline
Being a good investor means also being disciplined. What I mean by that is to avoid being influenced by greed and fear and sticking with your plan instead. This will not only provide you with good returns but can help you in life as well.
Sticking with your plan and ignoring emotions has helped me a lot during the last couple of years. For example I have finished a 1-year apprenticeship about 2 years ago. It was very poorly paid and the job was pretty hard at times. But I stayed disciplined and managed to finish it.
The qualification I got gave me the chance to work in some of the best hotels and restaurants around London. It was hard in the moment, but staying disciplined has opened me the doors to do what I wanted to do. Who knows what would I be doing if I didn’t stick with my plan and never finished the qualification.
8. Long-Term Vision
Here I am not sure if I have a long-term vision because of the stock market or I am in the stock market because of my long-term vision. Either way being able to think for the long-term you are inevitably going to have a better life.
Having a short-term approach makes you do things like gambling, spending all your money on a night-out or buying a super-expensive car that you cannot really afford. It also makes you get a crappy job just for a little bit more money. I mean a kind of job that is not going to provide you with any valuable skills or experience.
Those are all short-term solutions to provide you with short-term happiness. But in the long-term fundamentally nothing has changed and you still have the same life with the same problems. Hope you get my point why the long-term mentality can help you so much.
Conclusion
Investing is a great way to build wealth. But it is also a great life teacher. It can provide you with some great qualities that are going to put you in front of other people.
I know that ETFs are a very popular tool nowadays and for a good reason. They are a fantastic way to get a return on your money and generate passive income. But I still advice you to have a small part of your portfolio (it can even be 5%) for single stock picks. Don’t get me wrong my plan is to hold most of my portfolio in ETFs. But still there is a lot of value to be had by picking stocks with a small part of your portfolio.
Obviously not everyone should do it. Still if you are thinking of having your own business researching some stocks might not be a bad idea. Investing can give you a great experience in a lot of aspects in life and a good advantage.
Hope you enjoyed this a little different take on investing, don’t forget to subscribe if you want to be notified for future articles.