There are many methods or strategies to make successful investments. In this blog, I would like to talk about my personal opinion on what you need to prepare to implement those strategies.
We receive a lot of requests to make a Tagalog video on the topics that we discussed in our youtube channel (https://www.youtube.com/c/MoneyExperimentPH ). The very reason why we don’t make videos in Tagalog is that people might solely depend on the videos that we make. Which is not the mindset that we want to impart to our viewers. People need to learn English to get the proper information from public sources. For example, If you want to invest in a fund, all the information about the specifics of the fund and what it invests in are all written in English. Another example, a new company is going through an IPO in the Philippines, the prospectus containing all the information about the IPO is, again, written in English. With Tagalog alone, the quality and accuracy of the information are certainly limited compared to reading from the source information directly in English. We always promote knowing your investments before you get into it, do thorough research about whether this is the right investment for you or not. To be able to do those processes, I would say English is a must.
In the Philippines, most of the people I know hate math and they want to avoid it as much as possible. However, if you want to be a successful investor, math is essential. You need to know how to compute the interest rate you will receive, what would be the financing cost (how expensive the loan is), what would be the % return on investment, or what is the annual return. If you know the math, you will be able to capture when a great opportunity comes and you will be able to identify whether an investment scheme makes sense (or it is highly likely a Ponzi scheme). In the end, money and investment are all about numbers.
If you are curious about something, you can always google it. Too many people don’t know how to research or are simply just too lazy to do it. To be a successful investor, we need to know how to use google. I think 98% of your questions will be solved by just searching it on google. Another 1.5% will be solved by google-ing harder. Another 0.5% will be solved by google-ing a tad harder and involving thought processes or thinking.
4) Logic / Common Sense
When deciding whether something is a good investment, we need logic / common sense. Many people fall into get rich quick scheme and put money blindly into something (e.g. day trading course promising very high success rate, online shopping business course saying anybody can earn 1M, cryptocurrency projects that can change the world, pyramid scheme you will get millionaire if you recruit 5 people under you, etc.) People who fall into these tricks lack knowledge and also most likely had this fear of missing out because of something getting overhyped. If you think thoroughly of your investments, you will realize whether something makes sense or not. If an investment makes sense and you know the concept of diversification, you won’t go all-in on something.
You found an investment opportunity. You did the math and research and you decided logically, this is a great opportunity. Finding investment opportunities and actually doing investment are totally different things. It is very hard to actually do the investment though you concluded this is a good investment when all other people are pessimistic (2008 financial crisis, 2020 covid crash, etc.) Having the courage to push through with the investment when other people are saying no is something you need to have to be a successful investor.
Unlike trading, investment takes time. Sometimes it takes years for other people to notice that investment is valuable. For example, during the 2008 crisis, housing prices in the US crashed. Now, we see news about US housing prices being at an all-time high. Waiting patiently for your investment to grow is a must. Many people just quit investing or exit from the investment just because they couldn’t wait long enough to see their investment grow.
What else do you think you need to become a successful investor?