Ready or Not – How to Discover and Deliver the Best Investor in You?
Ready or not – how to discover and deliver the best Investor in you? Many questions if they are investors, and many feel they don’t have the knowledge or funds to get started.
When you earn a paycheque in the US and Canada, the employer deducts amounts from your earnings. Part of these deductions goes to the federal government to fund old age security or a government-paid pension when you hit a certain age. So you are an investor whether you like it, think it, or do it; the government invests on your behalf for your golden years (retirement).
Your Role as An Investor
There is a lot of debate on many types of investors. But, first, you are either an institutional investor, someone who is a professional and, for the most part, manages other people’s or companies money.
The second Investor is an individual investor, where you are an active investor or a passive investor of your money.
For this blog and teaching, I am focused on individual investors only.
Get Off the Sidelines – Ready or Not -How to Discover and Deliver the Best Investor in You?
Before I outline individual investor types, my goal is to ask you to move from a passive role investing to an active part of investing. Further, to ask you to take more personal responsibility for your investments.
I come from the belief that no one will take better care of you than you if you have no interest in managing your own hard-earned money and are happy to hand it over to someone else, fine.
But if you have made no effort to see what it takes to play an active role in your investing. Therefore, remember you will get the result you deserve.
The cost of someone else looking after your hard-earned money comes at a price. Above all, no one is managing your money for free.
There are costs. Most costs include a fee to buy, sell or redeem an investment, withdrawal or deposit fees, interest fees, distribution costs, administration fees, management and custody fees, and, my favorite, other, a catch-all line.
The True Price
In addition, over the life of your investments, the professionals handling your money make a more significant income from your money than you do.
Author Mark J Heinzl in his 2001 book, Stop Buying Mutual Funds: Easy Ways to Beat the Pros Investing On Your Own, talks about the madness of the low return on investing in mutual funds. (still available on Amazon)
However, if you want an updated spin on this message, read the blog Don’t Buy Mutual Funds, Buy The Company!
The author, Dividend Ninja, ‘s message is clear; one of his examples is that he made a 14% return on the value of the mutual fund company. However, the return on his money managed by the mutual fund company was a paltry 0.4%.
Types of Investors, Do You Recognize Your Type or Types?
If you want to play a more active role in your investment portfolio, let me outline the type of individual investor types there are:
- Automatic Investor (if you are paying into any government program or a company pension play), and the amount comes off your paycheque; you have automated your investment process. Remember, you could also contribute monthly money to other saving programs, such 401K, registered savings account, tax-free savings account, etc.)
- Daily Stock Market Observer, you have given your financial person permission to invest your funds, but you like to observe the return and growth of the investment, positive or negative.
- Engaged Trader, you have opened a self-directed account, making your own decisions.
- A socially Conconciuos Investor is a person purchasing investments for the good of the planet or causes. You have a robust belief system and put your money where your mouth is.
- Angel investors may have access to funds and want to work with entrepreneurs as first-time investors or venture capital play.
- Bargain Hunter is always looking for a great deal.
- Company Fan loves a company, its products, and active user of said products. We may not get the most significant return through value growth or dividend payout, but this is of lower concern. (ie. Apple, Mircosoft)
- Investment Tweaker likes to fine-tune their investments but never radically.
- Person to Person Lender is a money person behind a small business or individual.
- Money Lender to family, friends, and networks
- Property (my personal favorite)
Ready or Not? – How to Discover and Deliver the Best Investor in You?
Do you recognize yourself in these investor types? In addition, if you are taking an active role as an investor, are you now ready to deliver the type of Investor you are to the world?
Listen to a recent podcast I was a guest, Ready, Set, Goal – Real Estate Investing the Right Way with W. Rick Harris, and consider investment real estate as an investor.