If you're feeling a bit stuck with your investments or could use some fresh ideas to amp up your trading game in the new year, we've got just the thing for you. We've put together 10 valuable lessons, all backed by quotes from top investment experts like John Maynard Keynes and Albert Einstein. Let these wise words inspire you, boost your motivation, and get you energize to dive into the financial world of 2024.
1. Empower your investments with compound interest
Compound interest is the eighth wonder of the world; he who understands it, earns it; he who doesn't, pays it." This insightful quote by Albert Einstein, the renowned theoretical physicist, encapsulates the profound potential of compound interest.
Consider your investments as a growing snowball rolling down a hill. With each revolution, it accumulates more mass, resulting in a progressively larger size. This same principle applies to finance in the form of compound interest. The gains you make on your initial investment don't remain stagnant – they're reinvested, generating additional returns. Over time, this compounding effect magnifies your gains, allowing your investments to grow at an accelerating pace.
- Learn, grow, expand
“Know what you own, and why you own it." - Peter Lynch, Investor, mutual fund manager, and philanthropist
Don’t become complacent with your investments, read up about new options on the market, and learn about new digital assets and the projects they’re powering. Continue to learn and expand your knowledge, bear markets present an ideal time to sit back and reflect on your current portfolio and how you might like to expand it.
Spend time exploring emerging markets and the past performance of your assets, this reflection could have a significant impact on your trading decisions in the coming year.
- Practice non-emotional trading
“To be a successful business owner and investor, you have to be emotionally neutral to winning and losing. It is all part of the game.” - Robert Toru Kiyosaki, American Businessman
Emotion-based trading is never a good idea. Use the new year as an opportunity to tighten your trading strategy and prepare for the highs and lows that the year ahead will bring. While the practice takes a while to conquer, allow yourself to start over and avoid making any emotional decisions when it comes to your portfolio.
- There’s no time like the present
“Time in the market beats timing the market.” - Ken Fisher, founder of Fisher Investments.
Whether you’re working to pay off debt, build an emergency fund, or generate generational wealth, don’t waste time deliberating and instead jump right in. The earlier you start, the greater your future results could be. Many investors wait too late and miss out on an opportunity to maximise their economic growth.
- Cut yourself some slack
“The easiest way to manage your money is to take it one step at a time and not worry about being perfect.” - Ramit Sethi, American Personal Finance Advisor
This serves as a reminder that not every investment journey is smooth sailing. There will be ups and downs, don’t put too much pressure on yourself, and always remember that this is a long-term commitment and learning curve.
In your journey you will inevitably suffer set backs, whether due to external factors like a central bank's fault monetary policy or an internal factor like a poor trading decision. Give yourself the space to learn from the set back and continue forward, or seek investment advice to kickstart your growth period.
- Be prepared for failures
“Every now and then, the market does something so stupid, it takes your breath away.’’ - Jim Cramer, American TV personality and Author.
Ups and downs in the markets are inevitable. Ensure that you have the right strategies in place to manage the downtime, and in your daily life, ensure that your financial situation is set up to adequately manage any hardballs.
Setting up an emergency fund is an excellent way to overcome any unforeseen expenses and helps to protect your investments should you need to make a large, unbudgeted payment.
- Take calculated risks, consider emerging markets
“In investing, what is comfortable is rarely profitable.” - Robert Arnott, Chairman, and Founder of Research Affiliates.
Depending on your risk tolerance, consider allocating a small portion of your portfolio to a riskier investment, like major asset classes in emerging markets. Ensure that you thoroughly research this prior to investing, and find the balance by having a little fun.
- Be realistic with your intentions
“It is better to be roughly right than be precisely wrong.” - John Maynard Keynes, father of modern macroeconomics.
This quote serves to remind us that it is more beneficial to reach an approximate result than to strive for something that may be unachievable, and infinitely better than having no outcome at all.
- Rome wasn’t built in a day
“Investing should be more like watching paint dry, or watching grass grow. If you want excitement, take $800 and go to Las Vegas.” - Paul Samuelson, American Economist
Investments are a long-term game and rarely result in overnight success. Consider the long-term benefits of your efforts and seek alternative sources if you’re looking for a thrill.
- Stay cool, calm, and collected in 2024
“The most important quality for an investor is temperament and not intellect.” - Warren Buffet, CEO of Berkshire Hathaway.
Those who invest wisely know that staying composed and rational when the markets are unstable is essential to long-term success. This psychological acuity separates investors who consistently outperform the markets from those whose successes are only occasional flashes in the pan.
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