What are the most useful money investment and saving tricks?
The #1 most useful money investment trick for me is quite surprising.
In this post, I will summarize a few key lessons that help me as a full time professional to achieve early retirement. This is perfect for you if you are 45–65 years old, looking to accelerate your retirement as well.
1. Understanding risk and reward
Most people associate risk with rewards. We are taught in school that the greater the risk, the higher the reward.
However, after investing, failing, learning, and revising my strategy for 8+ years, I find that is not true.
If you are planning to invest a large sum of money, you better be CERTAIN that it is going to work.
CERTAINTY means you need to focus on high probability investments (90% probability or more).
Let me give you an example:
Imagine you have $500,000 to invest, you can choose between
- 90% chance of making $50,000
- 10% chance of making $5,000,000
Which one would you choose?
If you are investing, you would choose 90% chance investment because it gives you a high probability (CERTAINTY), and it is pretty difficult to make back the $500,000 if you lose it.
2. Don’t lose money
This brings me to Warren Buffett’s famous lesson - Don’t lose money.
This is why when it comes to long term investing, I focus on finding SAFE discounted stocks.
These are usually blue chip stocks that I consider to be undervalued.
For example, AAPL, MSFT, ORCL, V, MA may be blue chip stocks - but they are not undervalue all the time. Thus, timing is important.
3. Time in the market is more important than timing the market (only if you can’t time the market)
You might have heard of people say - time in the market is more important than timing the market.
While this is mostly true, time in the market only helps you get around 7% per year return.
If you want to get a higher return (20–30%), then you need to learn how to time the market.
From 2016 to 2021 where I was entering and exiting the market using technical analysis, my average return ranges from 30% - 50% per year.
If you are new to technical analysis, I would suggest you to study some technical analysis, price pattern to get better at your entry and exits.
If you are interested in my technical analysis template, I have a step by step walkthrough in this 2.5 hour training.
4. Learn fundamental analysis
You might have already started investing while working at a full time job. Most people start with technical analysis because it is easy.
But the problem with technical analysis is that it is not complete.
That’s why you also need to learn fundamental analysis such as reading income statements and balance sheet to further solidify your investment strategy.
This will improve your stock selection criteria (free training) and also avoid bad companies to invest in.
5. Learn more advanced strategies
Those are the tips for buy and hold.
However, if you want to learn how to speed up your investment to achieve your financial goals, then you will need to learn more advance investing strategies. Click here to register for a free training I made.
If you want to learn how to generate a more predictable income as well, then register for the free training here.