Investing is a solo act
In today’s world for an individual investor (or as I like to call us solo investors) many investment options are available. Additionally many investment management companies have created products on such options and raised investment alternative numbers to more than thousand. When I think about investing, I get overwhelmed on seeing such different options to invest. Even though I have some investing knowledge I get this overwhelming feeling of where to invest? in what to invest? for how long to invest? I then wonder, if this is my condition to choose an investment option, what would happen to people who have no basic knowledge of investing? Wait a minute, do such people really give a thought to such things or just chase whatever is popular? The best way to filter out so many options which I have found out is to just look at what I want. You see, investing is very different for each individual. No matter how much some people are alike, they have different needs and are at different life stages and have different conditions. Hence no matter for whosoever so many numbers of products have been designed, I know that I should just find and stick to such products which match my requirement. Here comes the general investment steps to define the investment goal, track it, if it goes out of our expectations then correct it. Which is actually correct though.
Investing is more about oneself rather than the investment alternatives. Hence in a simple thought, every one is a solo investor. Investing solely as they are unique in their needs, expectations, behaviour, knowledge and so many things which contribute to their uniqueness. This is the reason why I can’t copy any popular investor. Even though I do copy him, I would make sure his investment decision would match my needs, which seldom happens. Simply because, they are more knowledgeable, more skillful, have more temperament and patience and most importantly they have different need. Some invest for themselves and some invest for clients. Their client’s need is going to be different then mine. This makes investing a solo act.
Who am I?
Seriously, I ask this question whenever I would consider an investment. I started to ask this question to myself when I read The Intelligent Investor. In it Benjamin Graham talks about two types of investors, Defensive Investor and Enterprising Investor ( Aggressive Investor ). Which investor you become is decided by the amount of time and effort you put in studying the investments. This explains very well about the investment options I should go into. If I am not putting the required effort in studying the investments, I should go for the defensive approach. If I am willing to put in the effort, I should go for the aggressive approach.
Here the defensive approach does not mean using more of the debt investments and aggressive approach does not mean using more of the equity investments. A defensive approach can have more of the equity investments and vice versa. (Though I feel investing aggressively in debt is a not that useful).
Hence, the question comes, who am I? The defensive investor or aggressive investor. I may be anyone but the important thing is, each solo investor might want to ask this question to eachself. ( I will talk about the two types of investor in more detail next time).
Finally, investing is done as per one’s need and focusing on what one actually is. After this, one can look for the investment alternatives which suits both the factor.