– Unit Trust?
– P2P Financing?
Guess what … It’s none of the above. I believe the #1 investment that you can possibly make which brings you profits and no losses is … an investment to acquire a skill which is tradable for money. To me, this is profound.
Think about it. If you look around, how many people do you know personally have actually lost money in any of the above investments? Could they be your friends, relatives … or perhaps, ourselves? I too was not spared and had made investment mistakes that costed me money.
That leads us to the next few questions:
– Are all of the investments above totally bad and risky?
– Have anyone build himself sustainable wealth from these investments?
Chances are, their answers are a ‘No’ to the first and a ‘Yes’ to the second. Each investment stated above has its unique attributes and thus, possesses pros and cons. There is no such a thing as a ‘Perfect Investment’. But nevertheless, there are always in existence two groups of people:
– Group A: Successful Investors who Built Their Wealth from Investments.
– Group B: People who are Disappointed with their Results from Investing.
The 80/20 Rule
It’s also known as the Pareto Principle and it has been applied in many ways. For instance,
– The Richest 20% own 80% of a Country’s Wealth.
– The Top 20% of Salespersons contribute 80% of a Company’s Revenues.
– The Biggest 20% of Customers account 80% of a Company’s Profits … etc.
It’s the same for investing.
Let’s use stocks as an example. You may find that 80% had lost money investing in the stock market. The other 20% had built wealth consistently from it. Isn’t it fascinating? If you are reading this, you may tend to identify yourself into either the 80% or the 20%. That’s okay. But, I think the more important questions is as followed: ‘What did the 20% do or know that gave them successes?’
Here, I’ll list down a handful of differences between the 20% and the 80% when it comes to stock investing:
The Successful 20%:
– Have Crafted a Financial Plan.
– Read Financial Books. Attended Seminars, Courses, and Workshops.
– Read Financial Reports.
– Find Fundamentally Strong Companies and Buy Them Cheap.
– Have a System to Separate Good Stocks & Bad Stocks.
The Rest of the 80%:
– Don’t have a Financial Plan. Don’t even want to Craft it.
– Don’t want to Learn about Investing but yet Want Quick Capital Gains.
– Don’t know how to read Financial Reports. Don’t want to look at them.
– Buy Following Advices from Friends, Brokers, Analysts, … etc.
– Ad-hoc Investing. Chase News, Rumours, Pundits, … etc.
Here’s a tip.
If you belong to the 80% group currently, there is a choice that you can make to learn, model, and innovate what the successful 20% think, do, and achieve. You may start by learning from these 20% because I believe successes, no matter in what field, can be learnt, copied, and replicated.
Finding Sifus, Mentors, and Coaches …
Here’s a common trait of successful people, be it investors, businessmen, highly paid employees, sportsmen, … etc who are in the 20% category:
‘They like to learn and are very teachable individual’.
This is why they have mentors whom they can learn from to raise their chances of success in their respective fields. It is more efficient and effective as they are able to speed up their learning curve and reduce mistakes that could have been avoided. Hence, assuming that you belong to the 80% group, the question is:
‘Are you a teachable person?’
Here, I’ll list down a handful of differences between one who is teachable and a person who is not:
– Receptive to New Ideas, Methods, Strategies … etc to Improve a Result.
– Willing to Invest Money, Time, and Effort to be Educated.
– Blame the World for Something (let’s say, an Investment) that went Wrong.
– Expect Education or Results to be Handed to You for Free.
Here’s a good news.
If you are reading this article, chances are: You are teachable. If not, you could be doing a million other things than to read this article. I believe, for most, the reason why you are reading this is because you intend to learn the know-hows to further improve your financial situation.
Here, at KCLau.com, we have created a fairly healthy ecosystem where you can receive the best tools, ideas, strategies from the best and the brightest experts of various fields in personal finance in Malaysia so that all of us can move up to enjoy our well-deserved financial freedom.
10,000 Hours …
Now, here’s the difference maker.
You may understand that there is a difference between the successful 20% and the rest of the 80% and the importance of having mentors. But, if you sincerely desire to acquire a skill, you may want to invest 10,000 hours in practising what you’ve learnt from your sifus.
It is a road must taken before mastering an art or a skill, especially investing.
Let’s use stock investing as an example.
True value investors would study financial reports of his preferred stocks on his watch list on a regular basis. His studies would bring him much needed acumen in order to help him decide, whether or not, to make an investments into them. Such acumen is an added advantage to value investors over the other 80% who have lesser knowledge over the stock.
This principle can also be applied to real estate investing.
For instance, if you are new to properties, you may shop around, compare, and assess deals of 100+ properties before purchasing your first. Why? It is because you would be growing and maturing as an investment as you assess more deals in the property market. You’ll definitely emerge as a ‘different person’ after you have reached the #100 deal mark – despite not investing in your first property.
Will You Invest in the #1 Investment that You Cannot Lose?
The investment is to Acquire a Skill that is Tradable for Money and it takes one to realise the following:
– The 20% thinks, do, and achieve different results as compared to the 80%.
– The 20% has Mentors as Guides. The 80% (for most) may not have one.
– The 20% is willing to invest the 10,000 Hours to Achieve a Desired Result.
It applies to almost everything. But here, let’s stick to investing. The question is: ‘Will you Invest in the #1 Investment that You Cannot Lose?’
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