How to Think Like An Investor

If you run a business, then you will need additional reserves of capital to keep your organization running. According to Tim Sykes, one way to do this is through investing. If you’re not putting your money to work, then you’re gonna get left behind.

Bet on Your Country

Do you think your country will be on a long-term, downward spiral or do you think it will have ups and downs? If you think your country’s economy may grow for decades to come, then you should invest in the markets.

Of course, you can’t predict the future–but you can determine if it will likely be higher. A sinking economy does not benefit anyone, including the wealthy. So, it is more likely that the country will have good years and bad years. Anyhow, if the world’s economy collapses, your cash will be rendered useless.

Until then, you may as well invest.

Understand Your Goals

How will your business use the money? Expansion? Hiring? Research and development? All of the above? When you start investing, it is important to understand why. This will keep you motivated when you would rather spend any extra income on something frivolous.

Yet, if you invested $2,000 at a return of 10 percent each year–your investment would be worth $34,898,80 in 30 years. That may not buy you a new car buy then, but it will surely be welcomed.

Even if you could only invest $1,000 a year at a 10 percent annual return–that money will grow to over $1 million in 46 years. Understanding your investment goals now can really help during retirement.

Compounding is Powerful

If you invested $100 this year, and received a 5 percent return then your $100 will be worth $128. If you had a 10 percent return, it would be worth $161. The historical average stock market return is 10 percent.

At a 10 percent return, your $100 will be worth $1,083 in 25 years. This is the power of compounding. Each day that you invest is another day your money works for you.

This means you can ensure a more financially stable future for your business.

You Should Make Your Money Work for You

If you’re only earning .01 percent in your checking account, then your money is losing value against inflation. Between 2010 and 2015, the S&P 500 earned a return of 105 percent. This is why you need to take advantage of opportunities to increase your base of capital.

Plus, thinking like an investor helps to ensure other facets of your finances improve. It’s time to stop thinking like a consumer and instead, see your money as a tool for gains. When you see $100, are you thinking of buying a new phone or investing and how much it might be worth 30 years from now?

If you were to get a return of 3 percent, then it would be worth $240 in 30 years. A 5 percent return will turn it into $430. With a return of 9 percent, you’ll get around $1,327.

Final Thought

Improving your finances, and thinking like an investor, prevents you from wasting your money away on expensive toys you don’t need and barely use.