Meaning of the word “Investment”
If you take 100 investors and ask them the meaning of “Investment”, you will not get proper answer from all 95 people out of 100. How can you use some English words without knowing the proper grammar and especially if you are from an English speaking country? An example is, you want to have food after 2 hours. Can you say “I had food after two hours”? You can’t. It is because there is no meaning in that sentence and if there is one, it should be a misleading one.
“Investment” is a super word. One who wants to use the word “Investor” should properly understand the meaning behind it. Or, this can lead you to a trouble. Some traders, I mean short time traders, proudly saying that they are investors. Are they investors? No. But, they are traders. An investor is a person who has a solid plan or goal in his mind to achieve by doing proper action and wait patiently. The meaning of ‘proper action’ can be a study about the road he can use to invest his money or it can be an investment decision with multiple products that can give him proper appreciation after a period of time to achieve his goals. A good awareness on the exact meaning of “Investment” is the preliminary requirement for one before he starting any activities related to investing. Or you will be a coward in front of proper investors.
Lack of preparation
I will start with an example. You are planning a super vocation to go to Amazon jungles and rivers (which is my favorite place to visit at least once in my life). Will you pick your bag at the same moment and start your journey to the jungles? No. You will not. Then, what you will do? You will start drawing a detailed plan about the required preparations, travel facilities, arrangements required at the spot for food, stay, dresses, transport, tools and the plan to visit all possible places within your time limit. Then you will think about the source to have all this. I mean money. You will compare the cost for the above with the money that you have in your hand. If everything is OK, you will proceed.
Investment is also like that. You cannot directly go to the stock market and buy any share available there at that time. If you do so, you are going to be a big loser. In stead, you have to identify, work, confirm the profit possibility and all the positive and negative factors associated with the decision before making any move. Lack of this preparation is another major factor where investors losing there money in the investing field.
Greed is dangerous. Everyone should have a thought in mind that, he required to leave this earth by today or tomorrow. When such happening, he can’t take all those money he collected in this earth. Money is good for standard or well standard life. But over money doesn’t give any value to anybody. You can take the example of legend investor Warren Buffett. He had lots of money and he was number two in the list of most richest persons in the world. Finally what he had done? He contributed his major share to a charity house through Bill Gates, the founder of Microsoft.
Required amount of greed is good but crossing the limit always give you worry from the lose by taking wrong decisions eying a lots of money immediately. Remember, investment can’t make you millionaire or billionaire within some days or some months or years. It required time and it also required proper preparations and action. Greed to money is another major factor that can give large investment failures.
Blind follower
You can see the small fishes always like to follow its mother. It will follow in a line and when the mother turn back, they also turn back and again start following her path.Some investors are like this. They always like to follow others. If the person is little famous, then such followers will never look around but always look on the path where there self inspired mentor is doing. They have a tendency to do the same at the earliest. Remember, this is very wrong approach if you are an investor. A true investor should learn from other investor’s success but, blindly following his path will put him to big trouble. How a goat can eat like an elephant?
Tips taker
This is another factor which can give solid investment failure and great lose of money. Tips are fire if you are not approaching the same properly. The poison in the tip lying on the responsibility that someone need to take. Most cases, people frequently providing tips to investors but with a small clause at the end of there report saying “the person will not be responsible for any lose that happening to this who follow and act as per what we said in this report or tips”. Tips are just like someone who nicely smiling on us with an intention to kill us.
Blindly following the tips from any source are the another important factor that can lead to investment failure.
Lack of passion
Here is an example. Michael Phelps got nine gold medals as well as Olympics record in Beijing Olympics. He was into swimming. Suppose the US Olympic committee had decided and informed Phelps to participate 100 meter race instead of 100 meter swimming, what will have happened? Of course, he will have not won and US will have lost 100 meter medal as well as swimming medal. Phelps personally has lost the Olympic record as well as a possible gold medal.
Why US didn’t force him to participate 100 meter race? They are well aware that Phelps is into swimming and he can perform there. Because, he passionate to swimming and he can do whatever he want with that. Why I am saying this is, you should have look deeper into yourself to identify your passion before committing to anything. Investing required someone have true passion to that. Or there is enough possibility of investment failure. I hope you understood the requirement of passion from the above example itself.
Lack of confidence and fear to act
Less confidence and fear is another major factor that can lead an investor to the investment failure and huge lose. This character can be seen in some people who doesn’t have risk taking capacity but want to invest in high risk instruments by seeing the profit that instrument generating. Such people always have suspicious mind and that will lead then to miss out better opportunities to buy as well as sell. If you decide to do something, go ahead like Alexander the Great. You can win. Or you can lose. An example is, If a train is 1000 meter away from you, you can cross the rail. If the train is just 10 meter away, will you cross the rail? If you are not crossing the rail when the train was 1000 meter away, you are losing the opportunity to cross the rail and have to wait till the train pass. Thus, you are losing your time too. So confidence and courage is two must haves for a true investor.
Taking decisions – Heart instead of head
Here is an example for this: Two people went to see a beautiful house to buy. First person said, the paintings are very good and the inside arrangements are excellent. Second person was looking on the pillars and the strength of roof and walls. Here, who is really identifying the true value of this house? Of course, the later person. Why? From the view of first one, the house looks beautiful with the paint and the internal decorations used. We can beautifully paint any dirty thing and present in front of anybody. But there will not be any value or worth on that. A house should built with strong pillars, roof, walls etc to long last and receive worth to the amount what you are paying to buy the house. This is the best example for how thoughts are coming from persons. Thoughts of first person came from the heart because he saw only the external beauty of the house. Thoughts of the second person came from the brain because he saw the real strength and long lasting capacity of that building.
An investor should be like the second person. He should not commit to invest on any product by seeing the beauty and popularity of the product. But, he should use his brain to analyze and identify the worth and true value of the product. Hope you are fine with this point.
Most important factor you can avoid to get huge investment failure. An investor should have enough knowledge on the once that he is going to deal with. Here is an example: You are planning to buy gold or diamond. You went to the shop with money and asked the saleswomen to show the best gold product that he want. She was giving a gold plated copper and telling you this is the best gold product. Will you buy? No. You will not. This is happening because you are aware about gold and you are aware about how identify the gold.
This is happening because you have knowledge on the product and you know the real value of copper and gold. Investment is also like that. You should have very good knowledge to each product to identify the real value. Or you will be like a person who goes with gold plated copper by thinking that it is a real gold.