“It is human nature to think wisely and act in an absurd fashion.” ~ Anatole France
Today I want to talk about INVESTING. Recently I decided to have an experiment to heighten my awareness about my spending decision process. Here what I do now: every time I am about to spend money, I ask myself: “Is it a good INVESTMENT?”
This question makes me pose before buying a snack (good/bad for my body?), or a new piece of clothing (do I really needed it?), or a new training (how will it help me grow my business?); or pose before taking a new position on a stock market (Why am I investing in this company?) or investing in a new property. This practice allows me to have a short pose just enough to make the “buying” decision more conscious and intentional.
What I am trying to say here is that every time you spend your money, you are INVESTING in your life – in your body, your environment, your knowledge base, your business, etc. Being INTENTIONAL with your spending and viewing it as investment, will help you become a better money manager! YOUR MONEY manager! Does it make sense?
I already shared with you my suggestions about having saving and spending jars (accounts) and today we’ll talk about investing money jar. The purpose of your investing money jar is to grow your wealth over a longer term, for example, over a five year period. This investing money jar is usually meant for retirement funds, children’s college expenses, or long-term dreams, such as a owning a second home or leisure travel.
Since your investing jar has a longer timeline, it is important to find investment vehicles that yield a nice rate of return or ROI, a steady 8 to 10 percent annual return. It’s not easy to find such ROI these days when banks have such a low interest rate (almost negative) on our savings but it is possible to find it outside of the banking system! I am referring to dividend paying stocks, annuity products and rental real estate.
Personally, I like investments that are valued cheap, are hated at the present time and have started to rise. Examples from the past: real estate properties in 2011, precious metals in 2001-2004, stocks in the spring of 2009.
If you’re starting your investment strategy from scratch, the earlier you start investing with even mediocre interest rates, the faster your wealth will grow. Even small but consistent contributions will fill your investing money jar faster.
Multiple streams of income allow you to grow your wealth faster and provide an additional sense of security due to diversification. Having multiple streams of income is one of the main secrets of acquiring wealth. If you have an existing business, try to automate it as much as possible so that it will not require your constant attention. Once it’s automated, you can invest your time and resources into another business.
The idea is to have multiple streams of PASSIVE income that doesn’t require your constant attention. If at the moment you have a full-time job and are still building a business, it requires most of your attention and it’s OK. Just keep the intention of having multiple streams of passive income in your mind and be open to opportunities that may open up for you.
The ultimate goal is to be able to provide a comfortable living for yourself and your family from each individual stream of income. This is a much more prudent way to achieve wealth than getting into risky investments. The idea here is to leverage your skills, experiences, inner wisdom and hobbies to expand your earning potentials.
Below are a few investment vehicles to consider for your Investing money that are diversified among different asset classes:
These are just examples of various asset allocations to consider. You will do just fine with diversifying among few asset classes. However, make sure that within each of the suggested investment classes you further diversify your holdings. For instance, have different stock positions (do not invest more than 5 percent of your stock market portfolio in one particular stock or bond) or different pieces of rental real estate.
I’ll talk more about investment and risk management next time.
*Some of the text was taken from my bestselling book “A Shift Toward Abundance”.
With Love and Gratitude,
Millen is a Wealth architect and Financial Independence Coach, entrepreneur, and a bestselling author. Being a Possibilities’ Catalyst, she uses her intuition, business, and investment expertise to support entrepreneurial women (like you) who want to master their money, live their purpose achieve financial prosperity and freedom. With her physics and business education, corporate and entrepreneurial experience, money management know-how, mindfulness practices and transformational coaching skills, Millen has a unique ability to guide and support clients in achieving extraordinary success in their lives.