Why is it that some people are rich while others are not? It is not that they do something different, but just that they do things a bit differently. Here are some basic pointers which we can learn from the wealthy and invest like them.
Think differently about money: most of us would like to have more of it, but do not give enough thought about how to get it. Money is not just about consumption, but also about investment that generates more money. So spend judiciously, save more and invest smartly to get more money.
Small is big: when we think of wealthy investors, we think in billions! But even a small amount, if invested right, can become a big amount tomorrow. Start investing with whatever little amount you can, and over time you can build up an asset holding like the high networth investors.
Take risks to earn more: higher risk gives higher returns; this is a simple mantra that everyone knows but few act on. The wealthy invest directly into equities and stocks. Mutual funds are meant for the average investors as they yield average returns. Seek out newer investing opportunities which are not crowded yet, and reap-in the first mover’s advantage. But do not bet all your savings into high risk investments, which brings us to the next point. I think investing in cryptocurrency falls under this.
Diversify your investments: The best way to hedge against risky investments is to diversify. Invest no more than 20% in any one form and build up a diversified portfolio. It helps minimize losses, and a smartly designed portfolio gives a decent and steady return.
Balance long and short term investments: Short term investments give quicker and usually higher returns. Long term investments are safer and more balanced options. Smart investors always strike a balance between the two. Over time, you can shift your investments from one form to the other depending on market sentiments, your requirements, etc. So remember - a good portfolio always has a judicious balance of the two.