INVEST TO RETIRE EARLY
From the same level of savings, INVESTING can make a very big difference to your financial position. However, the result is the least controllable among the elements for financial independence. You may be inundated with a lot of advice, some of which might be good, but most of which can be counter-productive.
The most important question to ask yourself is:
Am I an investor or a trader?
An investor focuses on the long-term (several years to decades) whereas a trader’s time frame varies from minutes to weeks. An investor minimizes risk whereas traders need risky situations (although both are interested in high returns). The information available from brokers, the press and TV is mostly targeted towards traders. As an investor, you don’t need the daily prices and commentary found in the financial media. You also can do without most of the seminars and books on the topic.
Following are suggestions for your investment. They include pointers for reducing risk and cost.
The first consideration is to own your home as early as possible. For most people this is the least complicated and lowest risk way to invest. But while the home provides some security, you need additional income to pay for non-housing expenses if you want to be financially independent. You can invest in a variety of asset classes. For investors, these are direct property, stock portfolios and bond portfolios.
Own stocks directly
Understand fatal flaws of Fundamental Analysis
Understand fatal flaws of Technical Analysis
Understand fatal flaws of Contrarian Trading
Buy takeover stocks
Buy value stocks
Diversify across time
Diversify your holdings