Owning a piece of business is a way to wealth and financial freedom. But the question is how can we keep it simple? Two golden nuggets that helps in this direction are:
- Buy only good business/company (one that have high return on capital and management integrity and clean books of account)
- Buy these companies at bargain prices or at reasonable prices
It then boils down to having a simple strategy.
A simple strategy need not be most optimal strategy but a sensible strategy. Most investor loose money as they try to chase high returns. According to latest data almost 90% of the short term traders who try to get high returns end up loosing money. The key objective of the strategy should be to achieve your financial goals. Investing is marathon, not a sprint.
The next part is the execution of your investment strategy. Here what will help is to have absolute clarity, belief and sticking to the strategy in difficult times. For this reason, it is better to have a written down strategy so you can review in volatile times. Be consistent and persistent.
The third and most important is to understand your risk tolerance and temperament to stay in the markets longer through ups and down. Finally, remember that the wise investor knows that he/she can be a rich and successful investor without attempting to beat the markets. Thus, even a simple instrument like an index fund or ETF can be very important part of the sensible strategy.
So, keep it simple because simplification is the ultimate sophistication and enjoy the wealth creation journey. At Rising Tide Wealth we help develop strategy and create a super dream plan for financial freedom.
