Most people know
the story of the tortoise and the hare.
As the story goes, tired of the Hare's boastful behavior, the
Tortoise challenges him to a race. The hare soon leaves the tortoise behind
and, confident of winning, takes a nap midway through the race. However, when
the Hare awakes, he finds that his competitor, crawling slowly but steadily,
has reached the finish line before him.
What does this have to do with investing?
The Hare, thinking that a swift departure is all that is
needed, became complacent. The Tortoise, who slowly yet consistently advances,
wins the day.
In today’s popular media, advertisers use a lot of pressure to
get people to invest and invest quickly:
“Time is running out!!!”
“Start growing your savings today!!!”
“Make up for all the years you didn’t invest.”
“Social Security is running out!!!”
...and many other such calls to action. In most cases this is
harmless – meaning the investor gets a little or no return. In other cases, a
person could lose everything they invested.
How is a person to know if an investment opportunity is really sound?
5 Ways To Make Sure
You Have Considered All Aspects Of A
Potential Investment
1. Never Make A Quick Decision.
You may have
worked months or years to save those funds. Don’t make a sudden decision to
place them. Although you may convince yourself you are thinking logically, and
that you understand everything that was just explained to you, you may not be. Just
because you don’t have any immediate questions, that doesn’t mean you won’t
have some later that day.
No matter what,
wait at least a day or longer to digest and think about the information. If you
are being told that it is a limited time offer, or that “many other investors
are waiting” recognize this as high pressure sales, or maybe even potential
fraud.
2. Educate Yourself
Get data. In
addition to learning more about the opportunity, find out the track record of
the person offering it to you and the company they work for. Find out exactly
how this product is going to help you reach financial independence. Don’t be
shy or embarrassed. Ask questions — and expect complete answers.
3. Weigh It, Measure It And Make Sure Nothing Is Lacking
Create a list of
outcomes. The good, the bad and the uncertain. Don’t just focus on the rosy
return you are being offered. Make sure to write down at least a couple of ways
this investment can go wrong (money locked in for a certain term, risky
placement, etc.) and how much money you could lose (is the offering
insured/backed/reputable?). If you think it's a sure thing and that nothing can
go wrong, then that's a sure sign you need to dig deeper.
4. Talk About It
Discuss the opportunity
with someone else. To do this, you have to actually understand something first so
that you can explain it to someone else. second, you are getting feedback from someone
who doesn't have an emotional vested interest from this decision.
5. Step Into Their Shoes
Don’t be swayed
by grandiose promises of huge returns. In addition to asking yourself how this investment
benefits you, also consider how the person or company selling it will benefit.
Their motivation may not be in your best interest.
The Tortoise won
the day by advancing slowly and steadily. Thinking more slowly and deliberately
will help you with all your important decisions, not just financial ones. Doing
so may not protect you from making mistakes in the future, but you'll make
fewer and less costly ones.
Bottom line is that there is no blanket strategy. Each person must evaluate their own circumstances, needs and desires. Get the help you need to achieve financial freedom.
Above all, believe in yourself and believe that you will achieve your goal!
Above all, believe in yourself and believe that you will achieve your goal!
_________________________________________
Sources:
Lynda at Sonoran Sun | Private Equity Investments
Sources:
Lynda at Sonoran Sun | Private Equity Investments
