How to become an expert investor, fast
Two years ago, I knew nothing about investing. I was a computer geek, after all, and had never paid much attention to economics basics. The money I had either went towards day-to-day and monthly needs, or into a basic savings account.
After a decade of monthly salaries, I had saved up a sizeable amount. However, it wasn’t nearly as much as I needed to live the life I wanted to live. By the time I retired, it would probably be enough to cover my basic living expenses. But that meant I would never get to travel to the countries I dreamed of visiting. It meant I would have to be disciplined for the next three or more decades.
Everything changed when a friend of mine recommended actively investing my money. Not just putting it into an account with a minimal amount of interest, but making riskier, more advantageous trades. With investing blogs like investorjunkie.com providing plenty of information for free, one can navigate their way around all the ins and outs of investing.
I was skeptical, but I decided to give it a try. As scared as I was about losing the money I had saved, I was more afraid of missed opportunities. Here’s what I learned.
Technology has taken over
I had to learn about investing, but not nearly as much as I expected. On the contrary, after a couple of weeks of research, I felt ready to start investing. This is because technology does most of the work these days.
Learning about robo-advisors was the most significant discovery. Robo-advisors do the bulk of what investing is about. They take the endless information that affects a particular trade, including its entire history and context, and make predictions based off complex algorithms. Since they can process exponentially more data than a human mind can, they tend to be far more accurate.
You ultimately have the final say in any decision about an investment or trade. However, paying heed to what the robo-advisor recommends – or even giving it permission to execute trades – can prevent human cognitive biases from getting in the way.
You can be risk-averse
I know what you’re thinking. “That’s all well and good for those happy to throw away money, but I’m not a risk taker.” The thing is, I am quite risk-averse as well. For this reason, I only allow my robo advisor to make certain decisions, with a particularly low level of risk. This means I don’t have to worry much about losing my money, but I make significantly more than I would in a Money Market account or in government bonds.
If you’re going with low-risk investments, you will have the opportunity to take the bulk of your money out before anything disastrous happens, even if things start going south.
The truth is that no matter where you are investing, including in the “safe” options, no one can guarantee anything. Government bonds and Money Market accounts are also vulnerable in the case of total economic collapse.
It is all good and well to be risk-averse, but don’t let that stop you from taking advantage of the tremendous opportunities available.