Investment as a Habit
A habit is a mode of behavior that has become involuntary or constant due to regular practice. Habits are not inbred; rather they are acquired through constant practice or effort.
Investment refers to the process of putting away money on a periodic basis, so that it can yield rewards and returns for the investor. The money is carefully invested into assets such as stocks, bonds or shares so that it can multiply. The concept is loosely referred to as putting money to work.
Investment is necessary because it leads to financial security, can help you to retire early, can gain you tax benefits and provides you with a safety net during times of financial crisis or difficulties. Not everyone starts out as investors, but investing is a habit that can be inculcated through repeated and consistent efforts.
The Mindset about Money
Before we begin to cultivate a habit of investments, we need to get into the mindset of investing first. We need to change the way we think about money.
Our mindset about money refers to our attitudes or beliefs about money. This is not something that happens overnight. It is a result of our ideology about money and we develop this ideology through interactions with our family, friends, employers, colleagues and other sources. Our mindset is often a product of our backgrounds and our interactions. This mindset influences our viewpoints when it comes to money management and investment.
Here are a few characteristics of people with a positive money mindset:
- It is possible to achieve a financial goal if you have a good plan for getting there.
- Money is viewed as a means to achieve things rather than as an end. The aim is to make things happen rather than to accumulate a lot of wealth.
- There is no point in wasting time by comparing ourselves to others or worrying about how others are able to achieve more wealth in comparison to us.
- Money management is an acquired skill. Anyone can learn to manage their money better with the right training. This skill is not limited to a few people.
A positive mindset is crucial to achieving the goal because it determines how much effort we intend to put in, how we view others who have money and our confidence in paying off debt and investing.
As Warren Buffet put it, “Investing requires qualities of temperament way more than it requires qualities of intellect”.
Relevance of Positive Mindset for Investment
A positive mindset about money will encourage you to:
- Realize that you do not have to spend all the money that you earn in the present.
- Set aside an amount for your future use.
- Try and devise methods to invest for the future, because money can cushion your future and buy you a better tomorrow.
Four steps to the Investment Habit:
- Consistency
Consistency is the most important factor when it comes go cultivating a habit. What you do everyday matters more than what you do once in a while. Make investment a part of your daily routine so that it becomes an unavoidable part of your life.
Once you start investing, make sure it is a regular and consistent process so that it becomes a habit. You will never realize the pinch of keeping money aside and you will relish the feeling of achievement that it gives you. Also, only consistent investments can yield better results.
- Compassion:
Think about the future and resolve to be kind and compassionate to yourself. Investment is the most important thing for your wellbeing. No one can hope to hold time still. Situations changes and so do finances. Even inanimate objects are subject to wear and tear so we have got to make provisions for the fact that we would also require maintenance and sustenance in future. Your wellbeing should be at the center of your decision to start investments.
You are gifting yourself a secure future when you start investing today. This will leave you in a better position and your future self will thank you for the wise decision you have made. Build up the habit of investment to be kind to yourself. Do yourself this one favor.
- Start Small, but Think Big:
It might not be possible to put aside huge sums of money for investing right at the beginning of your journey. The key to investments is to get started. This is an infectious habit – once you get on the bandwagon of investing money, it would not be easy to get out of it. So start squirreling away small amounts of funds and you can slowly build it up.
Also, contrary to popular opinion, don’t try and invest bigger amounts for shorter periods of time. Rather invest affordable amounts for a longer time period so that the outcome or returns are big and the efforts are relatively small.
- Start Today:
There is no auspicious moment to begin investments. The best time to invest your money was 20 years ago; the next best time is now. Do not hesitate or dither from taking that first step at this time.