Did you come here looking for an article that will tell you how to invest your money for the best return? I'm sorry to say that this article isn't for you then.
I will talk about mindset and investing here, not what to invest in, as such.
So, investments and investing.
Big and scary words for some people.
Why is that, you think? Is it because we don’t know what we should invest in? Is it because we don’t know what investment is the safest?Is it a combination of the two and an added layer of that we don’t know the first or last thing about investing?
I can only speak for myself and our family, but when we began investing, it was a combination of several things. The reasons I've listed above was part of what held us back.
Have you heard of limiting beliefs? A quick explanation might be in order.
A limiting belief is what it sounds like, kind of. It's something you believe about yourself, or don't believe about yourself. This belief holds you back. Changing Minds explains limiting beliefs as: "Limiting beliefs are those which constrain us in some way. Just by believing them, we do not think, do or say the things that they inhibit. And in doing so we impoverish our lives."
I grew up thinking that investing in the stock market was equal to gambling. You put in a bunch of money and if you're lucky, you'll make a profit. I guess there are people who invest like that, but it's most likely not the best way.
I used to think the coolest thing you could have was a savings account. Most often the interest on those accounts was below 1%.
Granted, it was a safe investment, but not a very good one.
I don't know if my old beliefs about investment qualify as limiting ones. With the explanation above in mind, I mean. Either way, it's not correct beliefs and not ones that I still believe in.
Have you ever wanted to invest money but thought "I can't do that, I don't know how to."? That might be true, but it's also quite likely a limiting belief. We live in an age where information is everywhere. So not getting informed is only an excuse to avoid something.
In a similar manner, have you ever thought that before you invest in the market you need more knowledge? That might also be a limiting belief.
I'm not saying you should rush into investing without knowing what you're doing. At least to some extent. What I mean is that you might use lack of knowledge as an excuse to gather more knowledge so that you can procrastinate.
You get stuck in the mode where you only search for information and never act.
This could be because you're scared to take the step to start investing.
Apart from the gambling argument to avoid investing, there's one I hear as often. People have the idea that to be able to invest money you're depriving yourself of living now.
Sure. That could be true.
For some people, it very well might be true and they might not have money enough to invest. Not without removing something else.
I get that.
This goes back to a related idea, that frugality comes at the cost of living your life. Which to me, couldn't be further from the truth.
In our family, frugality has enriched our lives, not deprived us. But I digress, and I've already written about this in a different article.
When you decide you will start investing, be clear on why. Make sure you have a crystal clear goal that you're certain about. It could be "smaller" goals or huge ones.
For our family, our end goal is early retirement. It's our pot of gold at the end of the rainbow. It's our huge goal.
With a goal like that, we're not feeling deprived. We're feeling empowered every time we manage to save and invest more. It's taking us closer to our retirement.
It's making us happy.
It wasn’t always like this for us though. Our first actual investment was in a fund. We were going to get a rather major renovation on our house done, but due to weather, we had to push it forward a year.
We took the money that was just sitting in a savings account and put it in a fund.
We were lucky and in one year we had a 10% return on that investment. Free money for the renovation next year. Whoop whoop.
I guess in a way we had a goal with that investment, it was short-term to make better use of the money than just letting them sit and wait.
Having a clear goal makes it easier for you to leave the investment alone and only use it for what it's intended for.
So, goal up. Hands off.
If you want to get started with investing, the first step is to get or free up money. There are, of course, several ways to do this. My favorite way to get the needed money to start is by budgeting.
I like budgeting, not only because it can get you started, but also because it's usually a long-term way as well. Unless your family's finances take a turn for the worse, you'll have more or less the same money each month to invest.
Another way to get money for investing is by taking on another job or start a side hustle. Today there are so many different things you can do as a side hustle that I can't mention all of them.
With a quick search on Pinterest though, I can say that doing surveys and starting a blog are two ways. From what I've read on taking surveys, there are good and bad ways to do this too. If you want to get involved in this, get informed as well.
Starting a blog can be a good way to side hustle, but it's also something that takes a lot of work and time. Especially if you want to do it with making money in mind.
But both things mentioned are options for side hustles.
Another way to get started with investing is by selling stuff you don't need or don't use. Throw a yard sale, get a few hundred bucks and invest away.
As I said at the beginning of this article, it's not a guide on how to invest. But now at the end, I also want to say that I don't mean to simplify the idea of investing.
Investing can be very complex if you wish to make it complex, or it can be as easy as investing in an index fund. With this article, I wanted to inspire you if you've been wanting to invest, but haven't taken the step to do it yet.
I also want to say that there's no magic bullet in investments either. If you invest, you might lose money. It's one of the risks. That's why our family's philosophy with investments is to never invest money we need for something else.
Except for that time with the money we needed for renovations. We’re still learning.
Only invest money you can handle losing.
We invest long, long, long-term. So we put the money away knowing that we will not be touching it for many years.
We’re not investing to get big bags of money from buying something cheap and selling when the price goes up. Honestly, we’re not skilled enough to determine what’s cheap and what’s a good investment in that way yet.
Our way to invest is inspired by Warren Buffet. We buy stable companies with good cash flow and assets and keep them. We also look for those kind of companies that have good dividends.
Simplified, dividends is basically that the company pay out part of their earnings to their shareholders.
When we get dividends, we reinvest them into the same company to further increase our holding and future dividends.
Of course, there are people who make a living by buying and selling stocks every day. Or people who make a great passive income from dividends and they don’t have to, or want to, reinvest their earnings.
We’re not there yet. We’re early on our journey towards early retirement.
As a closing thought, I can say that our family is able to invest money since we're living well below our means.
Some people scoff at our tiny house and our way of budgeting the fun away (their words), but it gives us the life we want. Not the life people expect us to want because of how media paint a picture of a happy life.
Are you investing yet? How do you get money to invest on a regular basis? Share your story, please and we'll all love you for it.
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