Investing isn’t just jumping into the stocks market. Are you really ready?

Investing isn’t just jumping into the stocks market. Are you really ready?

 

For many people, the word “investment” immediately brings to their mind buying stocks .

But if you don’t understand the logic and structure behind investing, you might end up as one of the “endangered retail species” — easily outplayed by institutional investors and seasoned pros.

 

A U.S. physician, after losing money in the stock market, wrote a well-known book:

“The Four Pillars of Investing” by William Bernstein. He shared that successful, long-term investing is built on four core foundations:

The Theory of Investing

The History of Markets

Behavioral Finance (Investor Psychology)

Understanding the Investment Industry

 

I would like to summarize these into two essential elements:

Investment IQ + Investment EQ

Without Investment IQ — You don’t know what you’re buying, can’t tell if it’s overpriced or undervalued, and end up staying out of the market out of fear… missing long-term growth opportunities.

Without Investment EQ — A little volatility shakes you. Even if you hold quality assets, your emotions push you to sell at the worst time. The market is up and down — and so are your decisions.

 

So investing isn’t just about picking a product or following a strategy.

Many financial institutions promote asset allocation as a way to manage risk, by spreading your portfolio across different asset classes. But is this conventional method suitable for everyone?

Not necessarily.

 

As Ray Dalio (founder of Bridgewater Associates) once said:

“The risk of stocks is three times that of bonds —

so how can we just split our portfolio 50/50?”

 

A sound investment strategy should be personalized, and take into account:

Your financial goals

When you’ll need the money

How much risk (volatility) you can tolerate

What kind of return you’re hoping to achieve

 

The better you understand yourself, the better you’ll be able to manage uncertainty and develop your own investment philosophy.

 

Coming Up Next:

How to assess your investment risk profile

I’ll share tools and tips to help you understand your natural investor type — so stay tuned!

Want to find out what investment allocation fits your life goals?

and I’ll share a free Investor Risk Profile Worksheet with you!

Let’s take your investment journey from reactive to strategic.