5 things I wish I knew before I started investing
You are losing money every day if you are not investing.
Investing IS the only way you can ensure your money keeps its buying power (value) and grows and works for you so you can stop working and live off your investment returns at some point.
BUT!!!!
⚠️⚠️⚠️⚠️WARNING ⚠️⚠️⚠️⚠️
Starting investing without understanding these five principles could cost you thousands and even worse - cost you the money you've worked so hard to save.
I get it.
Investing can feel intimidating and scary–especially if you’ve never been taught how to do it by someone who actually knows how to do it safely.
Click on the video graphic to watch the video on the 5 core principles of successful investing.
So let's dive into the five core principles of successful investing.
1. Know What Investing Actually Is
Understanding what Investing is, is the first principle to becoming a successful investor.
Investing is the act of allocating money or resources into assets like stocks, bonds, real estate, or businesses with the expectation of generating profit or income over time.
Investing is when you take some of the money you have and you use it to buy or create an asset.
An asset is something of value that stays in your life and grows your wealth.
An asset is something that can grow in value and generate income.
So when you convert your savings into owning an asset you now have that asset working for you to create your wealth.
It is also really important to understand what investing is NOT!
Saving is important but it has a different role in your wealth creation. You save money in order to spend it later. With investing you never intend to spend that money, only the money your assets make for you. That's a very big and important difference.
Trading is just having another job! You make money from the active exchange of goods so if you stop the activity the money stops. With investing the whole point is you don’t have to work!
Read this article to understand the key differences between investing and trading.
Investing is also not gambling!
Sadly for many people it is, when they take that hot tip from the loudmouth at the barbeque or when they dive in without understanding what they are doing.
Investing is following a solid proven strategy of buying quality wealth generating assets that grow in value and generate income, so that the cumulative value of your assets (your Net Worth) gets to a value where the growth and income they generate can pay for your lifestyle - and you get the ultimate freedom - the choice to do what you want with your time and life.
2. Know Why You Are Investing
If you don't know where you're headed, any old road will do!
Very few people become financially free because most people have no idea what financially free is and what it is for them specifically.
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If you have not yet calculated your freedom number and the price tag of your free life then dive into the Wealth Made Simple training here and become one of the elite few who knows where they are headed.
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Just saying you want more money or you want to be able to stop working or you want to be able to stop worrying about money… isn't enough.
You need to know the value of assets you need, so that the growth and income generated by those assets are enough for you to live off them forever! This means you can stop working and your assets pay for your lifestyle.
This is why you invest and why you MUST invest. Without assets to pay your bills you have no option but to keep on working!
No assets, no freedom.
3. Consistent and Regular Investing Is The Way.
Consistency is the key to successful investing.
Consistent regular investing, using a proven strategy is how you create real sustainable wealth.
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In this free training on How To Invest Safely and Successfully you will discover the strategy I used to create my financial freedom and the strategy thousands of others have now used to do the same.
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Consistency is the opposite of the octopus on roller skates approach to life. So many people chase after the silver bullet, the one thing that is going to rescue them, the get -rich -quick scheme - only to end their life broke and broken.
Successful investing is committing to investing a fixed amount of money every month and using that to buy quality assets in an automated way.
Consistency is the number one success principle in every aspect of life but the biggest question I get asked is “Ann how much do I need to invest?”
You should be investing a minimum of 10 % of all of the money that comes into your life.
This is called Paying Yourself First.
When you work out your Freedom Number by doing the Wealth made Simple training you might go, wow that's huge!
Remember…
… your assets will create most of the money you need in order to be free.
BUT…
… you have to initiate the process and keep planting the seeds that will then grow. The first action and contribution to your wealth must come from you!
The rule of thumb is a minimum of 10 % of your gross income gets paid to your freedom before you spend any other money. Yes you make your freedom the most important bill you pay.
The more you can put into creating assets for you, the faster you're going to get to living your financially freed life and having that freedom that you want.
So this brings us to the fourth principle, use compounding for you, not against you.
4. Use Compounding For You, Not Against You
Compound interest is the process where the returns earned on an investment are reinvested to generate additional earnings, and those earnings then generate more earnings which in turn earn more for you. This cycle of investment earnings earning more and more on both the initial money you put in and the reinvested returns leads to exponential growth.
Compounding is one of the most misunderstood principles and most people have compounding working against them in the form of consumer debt, spiraling them further into poverty.
Make sure you have compounding working for you instead.
Simply put, compounding is when you buy an asset, that asset grows in value or it generates income or both. That investment return is reinvested, and that money then earns more money and so you have a snowball effect of wealth creation where most of the work is done by your assets and not you.
Refer to principle number three, you have to start the snowball rolling. The seed money has to come from you.
The most extraordinary and astonishing thing is 90% of your investment worth at the point where you have enough to stop working and feed off your assets will have been created by compounding!
Your assets will create 90% of your freedom for you.
But only if you've planted the seed and started that ball rolling.
Understanding The Power of Compounding
With A Penny A Day
If I offered you:
A million dollars today, cash in your hand…
OR…
For the next 30 days, each day, I would give you a penny doubled each day?
So on day one you get a penny, day two you get 2 pennies, day three you get 4 pennies, day four you get 8 pennies and so on…
Which would you choose?
I've spoken to audiences of thousands all over the world and asked this question - most people say, “Hey Ann, I want that million in my pocket today.”
This is the “short term gratification” monster that fools us and keeps us from our goals!
Because we don't really understand this powerful logarithmic compounding power, and most people choose the “instant happiness” (aka constant failure) route.
But when you instead get these successful investing principles working for you and you implement your consistent regular investing, into quality assets and then allow compounding to work it’s magic - you get to be one of the few who experience real freedom.
If you had chosen the “consistent investing” penny a day, doubling each day option…
By day 30, you would have over 5 million in your pocket.
In fact, you would have $5 ,368 ,709 in your pocket.
What is also really important to know is that you only hit the million on day 27 because this is the power of compounding.
You must allow your assets to grow and work.
Which brings me to principle number five.
5. Follow a Proven Strategy and Let Time Work for You
It is really important to stick to a proven strategy and let time do it’s work, the penny a day example shows us how important it is to let time do its work for us.
Leaping around following the latest fad, listening to the hairdresser or the neighbour or the latest “get rich quick” scheme on Insta - leaping in and out of different strategies and between different asset classes, crypto one day, AI the next, online business the day after that…
That is the proven path to money hell! And being endlessly stressed and broke.
You must have a wealth creation plan where you know what you want and why and then follow a proven investment strategy consistently to create it.
Start with your equity assets. Use Index trackers to build us a solid base of quality assets and then you can add different asset classes and investment types on top of this solid foundation - if you need and want to.
You’ll discover all you need to know about index trackers, why they are so damn sexy and great for you and how to invest in them and with them in this free training, How to be a Successful Investor.
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BONUS Principle
People often ask me “Ann, when should I start investing?”
20 years ago!
As soon as you had money flowing into your life - no matter the amount - that is when we all should have started investing!
But most of us were never taught how, we never had any truly wealthy person to show us the way.
So the second best time to start is right now!
Not when you've cleared your debts.
Not when the kids have left home.
Not when you’ve got your business up and running.
Not when you have some money spare!
RIGHT NOW!
You don’t need alot to start investing, all you need to do is start!
Huge “let’s get you started” love,
Ann
