Quantifying how important the value of money is in a person’s life is extremely cumbersome to say the least. Furthermore, carrying out a comparative analysis of money on a relative basis between one individual and another, becomes even more complex, and that is simply because it is all relative. Every single person is different, has different backgrounds, lives different lifestyles, enjoys different hobbies and has different priorities and preferences in life.

And that’s how it should be. But, in the world we know today, can we really do away with money? It would be hard to imagine that.

Money is part of our lives, and is present in every stage of our life. In simple terms, there are generally 3 distinct means of how people gain access to money (in any shape or form, physical or electronic). The first is through inheritance (or via a donation for that matter).

Secondly, people make a living and earn a salary, reap their company profits and/or receive a pension at retirement age. Thirdly, people can also make money profits earned through successful investing, be it in the form of real estate investing, through the purchase and sale of bonds and/or shares or any investment product.

Money has become a necessity nowadays, there’s nothing wrong with admitting that, and is required to finance each and every one of our individual day-to-day lifestyles. In financial terms, money is our sort of working capital, and it is also required for the planning of our futures, for those most dear to us as well as for the generations to come after our time.

Net spenders are those who, in a consistent manner spend more than they earn whilst net savers are those who are able to accumulate wealth over time by spending less than what they earn, and hence are fortunate enough to put money aside either for investing purposes and/or for contingencies.

For those not quite familiar with the investment world, what it really entails, its mechanics and its dynamic, it might be cumbersome, or rather, a daunting task to take the plunge and trust people to manage their hard earned savings. Justifiably I would say. But in my opinion, prospective investors ought to take the necessary steps and have the right frame of mind before going down the route of investing. It’s not something you decide to do overnight, there’s a thought process before that.

Those who know me are aware of the importance I give to the need for people from all walks of life to focus on financial education. I have stated it many times in my publications that investor education is key for understanding the fundamental concept behind the risk reward trade off.

The need to invest in buying basic textbooks on key investment concepts will come a long way in ensuring that (current and prospective) investors have the necessary foundations to be able to understand what is being said in a conversation with their investment advisors. But it does not only stop at educating one’s self about the technical, operational and mechanical intricacies of the market, but also familiarising with the outside forces which effect the ever dynamic world of investments.

Keeping abreast with current affairs, such as global news, global politics, familiarising with the role and importance about central banks and the impact of their activity (or lack of it) on the markets, interest rates, and company profits via countless articles or global investment portals on the web. The information is out there for all to digest, and the best part of it is that a good chunk of it is available for free.

Humility and Patience. Investors need to be humble enough to acknowledge their limitations. It is a common trait that most experienced investors have. It is imperative for an investor to be flexible in your thoughts and be as critical and open minded as possible. Do not hesitate or be shy to ask for opinions. Be humble and trust the people who have the knowledge and expertise to give you the

necessary guidance tailored to your needs. This doesn't mean closing an eye to everything as investor initiative is also important.

However, when investments don’t go as planned (2018 was the worst year on record since the 2008 financial crisis), psychology comes into play big time, and patience as well as the ability to think and act in a rational way when things are getting bumpier than expected will come a long way in ensuring that investors maximise the potential from taking investment decisions.

Easier said than done, but do refrain from being impulsive in taking decisions; be patient, let an investment run its course as it needs to run a full ‘economic’ cycle to really reap its dividends.

It is true that quick bucks can be made, but not in a consistent manner hence the importance for investors to have a medium to long term investment horizon and not expect riskless money to be made in a short period of time.

Investors can get greedy at times, and 2018 can be testament to that. Those investors who tried to out-smart the market in such a volatile period came out empty and inevitably ended up worse off than what the market returned.

This article was issued by Mark Vella, investment manager at Calamatta Cuschieri. For more information visit, www.cc.com.mt . The information, view and opinions provided in this article are being provided solely for educational and informational purposes and should not be construed as investment advice, advice concerning particular investments or investment decisions, or tax or legal advice.

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