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Personal Finance

Why Investment Strategy Is Never a Race

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A quick win is an anomaly that happens once in a blue moon. In the financial world, quick wins are rare and dangerous. Call it common sense or karma, but it is probably a scam or incredible luck when an investment gives an almost immediate high return. Unfortunately, the first option is more common. 

Successful investments are the result of expert knowledge, dedicated strategy, realistic forecast, and long-term plan. Consequently, if you consider investment strategy as a race, you are more than likely going to lose a lot of money. Investments are all about holding the distance; as you start planting the tree today for the fruit you will only harvest in the medium to long-distance future. In race terms, investments are a marathon where you’ve got to be careful not to run out of funds. 

Every Expert Agrees: Take Your Time to Figure Out What You Need

While most people accept that they may not gain anything from their investment strategy until many years later, the decision to invest can often be rushed. Expert financial investment advisor, Victor Rigoni III, reckons that financial advisors need to build a strong connection with their clients to deliver quality advice. Indeed, rushing through the steps means you could end up with an investment strategy that doesn’t match your lifestyle or priorities. For instance, an investor who wants to secure their early retirement through a financial plan seeks a combination of mid-term and long-term and high return investment options with mitigated risks. On the other hand, a newlywed couple will prefer a long-term strategy that presents less risk to safely prepare for the future of their family. 

The Exponential Value of Some Assets

Does the value of all assets increase over time? The answer is no. Depending on the market, asset type, and rarity, the value can differ dramatically from one asset to another. For instance, selling your assets too quickly could be a miscalculation. Take classic vehicles as an example. Classic Beetle cars were surprisingly cheap when they hit the market as second-hand vehicles in the 1980s and 1990s. Nowadays, collectors can spend up to half a million $ or more to purchase an original model. The value of some assets increases significantly, in this case, because of rarity vs. demand. Understanding the right time to sell is key to a successful investment strategy. Patience is a crucial factor in maximizing your investment gains. This is also the case with modern assets such as cryptocurrencies. You can make small wins in day-to-day transactions. However, the waiting game is more profitable for NFTs (non-fungible tokens) and Bitcoin tokens. Indeed, Bitcoin tokens exist in a limited quantity, which means that holdling (holding for a long time) them for a few years will drive value up. NFTs, on the other hand, focus on exclusiveness, making them more desirable for holdling practices too. 

The Nature of Investments Is About the Long Game

Lastly, investors need to think about long-term results. Planning for the future serves a unique advantage for new investors: it gives you plenty of time to sort out your finances and address weaknesses and inaccuracies. Quick wins require a huge lump of capital to be readily available, which can be difficult for some households. On the other hand, long-term strategies can grow gradually without putting the household at risk. 

In conclusion, we all dream of getting rich overnight. Yet, if you hope your investment plan will magically turn you into a millionaire in no time, you are mistaken. Investments require patience, time, and commitment to be successful. 

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