I think writing is an excellent profession, but there is a flaw: you can't earn money. At least that's true for most of the writers. A mediocre banker, doctor, carpenter, or construction worker can earn enough income to make a living, but this does not apply to a mediocre writer. I do not know the situation in other countries; this is true for Turkey. I tried to save money to become a full-time writer for long years. I followed the alternatives closely to invest these savings correctly. The fact that I have been a banker for over 20 years and I have been good with numbers has been the factor that supports my investing interest. In this article, I would like to share my experiences with you as a former banker and a humble investor.
1. Spend Less Than You Earn
Monetary accumulation essentially consists of two components: the amount of savings and the return of savings. My general observation is that while people focus on the return of savings, they do not give importance to the amount of savings. The amount of savings represents the difference between income and expenditure for an individual. The most guaranteed way to increase income is to work hard in an environment that rewards performance. On the expense side, it is necessary to resist the madness of consumption, which is pumped with advertisements. It may be appropriate to save at least 20% of your monthly earnings, for example.
2. Set Your Investment Goals
Why does one need to save money? He may want to save money to get a car, get a house, get married, get a good education for his/her child, or travel. In addition to these goals, people can invest in not having financial difficulty in old age days or leaving a heritage for their children. When you determine what you are saving for, you reveal maturity, which is an important investment decision.
3. Think Long-Term
It would be every investor's dream to increase his investment in a concise period of time. Those who invested in cryptocurrencies in 2017 and earlier experienced this enjoyment until January 2018. Another miracle happened in the last three months. Unfortunately, such miraculous events do not happen very often, and adjusting the timing is challenging. The best thing is to have an installed heritage, but this is not a situation that we can determine. Being a long-term investment is the key. The power of compound interest can explain that the elderly are much richer than young people worldwide. When we get 5% real returns from our savings annually, our money reaches 3.38 times at the end of 25 years.
4. Invest In Yourself
One of the most important factors determining wealth is how much income you make, as I mentioned in the first article. I emphasized the importance of working hard. Of course, it is important to work wisely and efficiently. One of the key variables determining your income is to have in-depth knowledge and experience in a specific area of expertise. The best investment you can make in this context will be an investment in yourself. Today, the world is changing so fast that it becomes more important to what extent you have developed yourself after your education life than to which school you have graduated from.
5. Learn Your Risk Profile
There is a famous saying in the world of finance: the gain is the brother of risk. The greater the risk, the higher the potential return. Most people don't like risk. Many investors see this as the end of the world if they lose a penny from their main capital. Losing some of the money earned by labor can be demoralizing. The risk level of a financial asset is measured by its degree of volatility. Assets that experience major ups and downs in a short time are classified as risky. Investment instruments such as crypto coins and stocks are among the high-risk assets. Financial instruments with fixed returns, such as deposits and bonds, are lower at risk. Investing compliant with risk tolerance allows you to sleep comfortably at night.
6. Do Small Financial Tests
The financial world has become very complex as the years went by. No matter how smart, educated an individual is, it is challenging to understand the matter. Even those who work in finance can't see the whole picture. If you have decided to invest in a financial instrument, I recommend trying with the smallest possible amount. The best way to learn a subject is to implement it. Thus, you have trained yourself by taking a small risk, and you learn the environment. Little financial tests are likened to vaccination. When you do the financial test, the germ enters your body; your body will be able to resist harmful side effects.
7. Timing Is Important
Let us imagine that you have decided to invest in one of the hundreds of promising alternatives in the world of cryptocurrencies. You've studied well, and you've been convinced that this crypto coin will become much more valuable in the future. If you are a short-tempered character like me, you may want to implement this decision as soon as possible. The company may be promising a perfect future, but are you sure the investment timing is correct? Because it is not possible to know the right time exactly, gradual buying will protect you from timing errors to some extent. It would be appropriate to look at the price averages and make a larger purchase as the asset price falls below these averages.
8. Don't Put All Eggs In The Same Basket
Allocating investments to multiple asset classes is one of the most guaranteed ways of hedging. If one or both of your investments do not provide the return you expect for some reason, you can balance this situation with the return of your other investments. Warren Buffett criticizes the concept of portfolio diversification for bringing returns closer to the average. As you diversify your portfolio, of course, your return potential will be reduced with your risk. Portfolio diversification can also increase the time you spend managing your investments. However, I think it is worth investing in at least 3 different assets.
9. Focus On Net Return
The overall accepted measure for investing in a financial asset is the annual return percentage. However, there are components to be discounted in the annual return. The inflation rate of the relevant currency, the tax rate on return, commissions paid to achieve that yield should be considered. The world economy is growing by about 3.5% annually. It would be appropriate to target annual net return above this rate.
10. Trust Yourself, But Don't Be A Dreamer
Years ago, I invested in a private pension company and got a 50% return in a month. I thought I was brilliant, and I figured out the secrets of the financial system. When I couldn't achieve the same success in my subsequent investments, I realized that success was due to luck. Successful results in the short term are mostly due to luck or positive conjuncture. If you have achieved many successful investments that have spread over a long time, you can consider yourself a successful investor. If you are such an investor, please do not forget to share your tips with me :)
11. Consider Macroeconomic Factors
The price of assets is determined by two basic factors: the amount of liquidity in the market and the extent to which assets are attractive compared to each other. In this context, we can compare the amount of liquidity to water. If there is plenty of water on the market, all the containers belonging to all the asset classes will be filled, everyone will be happy. The amount of liquidity is linked to interest rates determined by the central banks. The higher the interest rates, the lower the liquidity. When the amount of water decreases, the other must be emptied to fill a container according to unified containers. Members of asset classes, such as crypto coins, stocks, bonds, and real estate, can act in the opposite direction than they are generally interlinked within themselves. To predict what will happen in the crypto money world, it is necessary to see the big picture.
12. Create A Strategy And Apply It Consistently
Once you have determined an investment strategy suitable for your risk profile and maturity, you will be able to apply it with determination. Changing the strategy or changing the investment tool often affected by rapid decline or outflow can result in losses, considering brokerage costs.
13. Do Not Make Daily Trading Based On Tips
I don't know anyone who made money by trading daily. I know many people who lose their money when they want to earn a profit in a short time. It takes many skills to earn income by trading daily. I do not recommend this investment method which is very attractive for intermediaries.
14. Evaluate Investment Alternatives According To The Risk-Return Balance
I stated that high-risk investments carry high-yield potential. It would be a good choice to consider the risk and the potential return when creating your investment portfolio. It may be a good choice to create a basket of risky and low-risk assets. To get a return, you need to take risks, but I recommend avoiding over-risk investments.
15. Information is Essential
It will be useful to take a look at the results of the basic and technical analysis of the assets you invest in and watch the news about the company you invest in. While following the news, benefiting from different news sources will ensure you do not overlook any information. Investing in companies that operate on your familiar topics will facilitate your follow-up. Of course, you should take advantage of the opinions of experts in this context. If the experts you apply to know are intermediaries for trading related assets, make sure that your interest matches the interests of them.
Thanks for reading.
Image Sources: pixabay.com and giphy.com
Great suggestions. Thank you for sharing your experience, it's very valuable 👍
Hello @muratkbesiroglu
Welcome to Project Hope.
Excellent read, 15 very important recommendations to consider for long-term investing.
When investing one has to evaluate many aspects mostly considered in your publication.
"Don't be a dreamer" is fundamental as well as establishing a strategy and keeping track of what you do.
Thank you for sharing.
I suggest you check out the information on the Project Hope economy, as well as some posts from @project.hope and you can join our Discord channel https://discord.gg/uWMJTaW.
Have a great day!
Hello @janettyanez,
Thanks for your encouraging comment. I checked out the information on the project hope economy and joined the discord group. 🚀
Have a nice day, best regards.
Cool!
Hello, first of all thank you very much Mr. Banker for sharing this valuable information !. I really appreciate you sharing your experience with this community.
The advice you offer is very valuable, particularly I have chosen to save 50% of all the income that I receive daily, I made this decision to sacrifice myself in the next few years (I calculate about 5 or 7 years from now), to have a fund preparing for my old age. Since at 52 this is something that has me worried. But the important thing is that I have already started doing it.And as of tomorrow I begin to see the first results, since I decided to invest in a touch that generates passive income on a weekly basis and continued having my $ 40 investment intact. It seemed like a very good idea and I am trying it, if it does not work out, I will gladly tell you.
But I want to emphasize that the advice to save is very important, I think the 20% recommendation is great.
It is also important to point out that people must plan, organize and even plan for a percentage of errors or losses, as this must be included in that management plan.errors, at least I do, placing a margin of error of 5 to 10%. It Estimated this high to protect my pocket .
And referring to the first point that I am forgetting, you are very right, being a writer is not an easy task and requires developing many skills, which can only be obtained by practicing and writing more and more.
I am at the point where I have been making a living for 7 years only with my digital content and my stories and blogs.
Excuse the length of this comment but it is that I have found that your material is really good and I am again grateful that you have shared it.
I hope to continue having the opportunity to read your publications!
Hello,
I'm glad that you liked my article. I've been writing full-time for 3 years now. I have 6 sci-fi books published in Turkey. I try to provide a certain cash flow by diversifying my writing business. Fortunately, I saved up a significant portion of what I earned during my banking years.
Great, I'm an inveterate fan of science fiction! Could you please pass me the link to one of your books to read them?
I would be very grateful to be able to enjoy it!
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STOPDear @muratkbesiroglu
Quite a long read. Didn't you consider cutting your post to maybe 5-7 recommendations, instead of 15? You surely would find more readers (I'm afraid that such a long publication will not attract much well deserved attention).
It's also hard to comment on it and engage in discussion, since there is just so much content in this post. I wouldn't even know which part to comment ...
(anyway that's just my little suggestion).
Stay safe. Upvote on the way :)
Cheers, Piotr
Thank you for the feedback, Piotr. I will consider this suggestion in my subsequent posts. Have a nice day :)
Hello @muratkbesiroglu
Thank you for posting within our community.
Please spare few minutes and read how project.hope is organized and learn about our economy.
That would help you understand more our goals and how are we trying to achieve them. Hopefully you will join our community and become strong part of it :)
Do you use telegram or discord? If you do then join our server and give me a shout. I would gladly share with you goals of our community and introduce to others from our team.
Consider joining our discord server: https://discord.gg/uWMJTaW
Yours,
@project.hope team,