I’ve been interested in money for most of my life. I spent a great part of my 20’s and 30’s chasing it and quite often actually catching it. I didn’t really get started trying to figure out how to grow my hard earned savings until I was in my late 20’s.
Over the years, I’ve rarely had a bank that would pay me more than 3% interest on my money. I think this is one of the biggest reasons most people never really seem to get started with saving their money. It’s just not that motivating even with a million in the bank. Nevertheless, you will never be able to build any kind of wealth unless you get started with some simple disciplined saving habits and the bank is our necessary ally when setting out on any wealth creation endeavor.
There are many aspects to building wealth like buying properties and building businesses that are both obvious wealth building enhancers but come with their own risks and rewards attached. If you own properties then you should keep in mind that no matter how you slice it, you will end up spending/investing on average at least 1% of the market value of your property just on upkeep. This makes sense as properties age and dilapidate. I’ve experienced this percentage to be quite accurate on all the properties I’ve owned over the years. Businesses, well they are a fickle beast at best and require more than just your money, they want your heart, soul, and constant attention just to remain functional year in and year out.
For the purposes of this article, I want to hit on some of the lessons and insights I gleaned by investing some of the extra, after tax savings that I was able to pull out of my money thirsty businesses and my ever needing upkeep properties.
Let me share what I’ve learned from investing in publicly traded company shares on various stock exchanges around the world. Part of the reason I was easily able to diversify my portfolio over the years is due to the fact that I lived and worked in various countries: Australia for 5 years, New Zealand 1 year, The UK for 5 years The Netherlands for 12 years, The USA for 23 years and Canada for the last 5 years so that would make me… well younger than I actually am, as I seem to be missing a year somewhere. Maybe that’s where some of my missing money is..who knows. Anyhow, I would like to share a few home truths that I experienced through my investing years.
- Don’t look at investments as pools of industries as in the Tech sector is rising so if I invest in some of the big Tech names then I will be ok. Nortel Networks Corporation is one such Canadian company that I should have sold but didn’t. Actually, I still have the worthless share certificates sitting around somewhere. It was a $6000 mistake for me and what I learned is that really big, highly respected and Canadian treasured companies can fail. I thankfully avoided Blackberry for this reason.
- Treat each company as a separate individual investment and keep a watchful eye on their growth, spending, acquisitiveness, and legal battles. If they are having any major customer service issues, labour disputes or being eaten by the competition then reduce your holdings in the company quick and smart.
- You can weather stock market crashes, corrections and crazy world events. I know this because my portfolio has weathered 13 of these since I started investing in 1999 and got caught out in the Tech Bubble Crash on March 10th, 2000. I decided to keep my holdings when the market dove in 1999 and saw that most of my holdings bounced back after a couple of years… erm… well… except Nortel that is.
- Only invest money that you really don’t need for emergencies or anything else. I treat stock market investments as the vehicle that will allow me to either sell at an upmarket time or pay out dividends which I can choose to use as income, for re-investment or just plain save.
- If you don’t want to pick individual company stocks then you could do well to choose a low-cost tracker fund that attempts to mirror the market as a whole. I believe it’s best to drip feed money into these funds each month so you can average out the highs and low’s over the course of the year. Meaning; when you are investing the same amount of money each month you will end up buying more shares in the fund if the market dips in January and February which the S & P has historically done over the last forty years and a few less in March, April May when the markets tend to rise before the typical summer slump. You will get the averaging effect. I know what you’re thinking but there are always outliers and the markets can be unpredictable so you’re better off sticking to an investment plan and getting used to the fluctuations that the market creates.
- Lastly, don’t take making or losing money too seriously as there will definitely be bigger things more worth your undivided attention. Whether you know what those things are now or are still discovering them. You’ll eventually have your own personal list and will be able to relate to what I’m talking about.
I sincerely hope that some of my thoughts and learned lessons have inspired you to save some money and start making some astute investments. It’s a rewarding way to increase both your and your family’s wealth.
Dominic Kotarski – International Consultant | Author | Coach | Trainer | Speaker
For a FREE/no obligation Business Consultation you can request an appointment HERE