Investing is not rocket science. Like any skill, investing in your financial education. It is learnable. Like any field, it takes diligence in study and practice to become good at it. It is unwise to simply enter a vehicle and hit the highway without knowing how to drive, owning a driver’s license, and owning the appropriate insurance. If you attempt it, you are an accident waiting to happen. Without insurance, you are left to pick the pieces all by yourself, adding to the fact that it is against the law.
You do not kit up and enter the operating theater without first getting a medical degree, doing houseman ship and learning under an experienced doctor in that field, and taking the first steps under the watchful eyes of a consultant or senior doctor before striking out on your own. It seems like common sense, but folks do it all the time. You hope to get the prize without paying the price.
The more you know what you are doing, the less the risk. You know the best time to enter and the best time to exit. You understand the language and can read the handwriting on the wall. You have an entry and exit strategy. Nothing takes you by surprise. You have a plan for when the market goes down and when it goes up. You know how to hedge your position and win no matter the market direction. Amateurs only know how to win when the market goes up. They lose when the market goes down. Because of the fear of a market downturn, they wait for prices to go up before they enter. They often enter late in the game, as prices peak, and panic as the downward trend inevitably follows.
Your first investment should be investing in your financial education. Invest in knowing what you are doing, so that when you start doing it, you will know what you are doing. Invest in becoming an investor before you start investing. You are not saving by taking a shortcut, or doing what you don’t know. You end up losing more money. It is like being penny wise, pound foolish. Ignorance is much more expensive than education.
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