Copying the masses and cookie cutter living won’t serve you in life, and it also won’t serve you in investing. In this article we’ll discuss how being unique is the best investment strategy.

In our fast changing world people tend to look for shortcuts. Following the crowd and the latest trend in investing is something you want to steer away from. Adopting someone else’s strategy won’t always work for you, even if it is working for them. To live the life of your dreams, invest in your own way.

 

You’re Unique. Invest That Way.

You have unique goals

 

Everyone wants something different. You may say “I want a lot of money and to be happy”, but your definition of both of those is tempered by your frame of reference. Your neighbor may say they want a lot of money and to be happy, but they may look completely different than what you have in mind.

You have set different personal goals and values than your neighbor. Therefore your investment strategies should be tailored to meet your goals. Goals, values and your core beliefs can be the fundamental platform to create your unique rewarding investment portfolio.

 

You have unique needs

 

Alongside your income needs, you also have personal needs. These are the things that make you feel comfortable when you invest. Usually, people need a cash account so that they can react quickly to an emergency, but the size of that account will change from person to person. The size of this account depends on a person’s “risk tolerance”.

Risk tolerance is the amount of financial risk you are willing to take on in order to make money, and it will radically change where you invest your money. If you are constantly worrying about money or checking your bank account, then having a volatile portfolio will just create undue financial stress.

For some people, they can tolerate risk. However, for others it’s just too worrisome. It is important to know the maximum amount of risk you can handle in your investment strategy.

 

You have unique obligations

 

Your debt is unique to your financial environment. Because of this, debt forms the floor of your financial needs. For investing, this sets several boundaries on how you invest.

The first boundary is how much you can invest. If you have debt, you have less free cash to put into investments.

The second boundary concerns what you invest in. If you are worried you can’t make your debt payments out of your income, you may want to invest conservatively to preserve capital. You may want to be investing in liquid assets so that you can pull your money out when you need it. Overall, high debt usually reduces the amount of risk you are willing to bear, which will probably decrease your returns.

 

You make unique income

 

Even the way you make money is different! Your paycheck and or income is unique to your personal financial life. This affects how you invest! It also changes what you can invest in. Anyone with a net worth over a million dollars (excluding primary residence) is an “accredited investor”, and you can invest in private offerings that normal investors simply can’t access.

 

You have a unique time horizon

 

Time horizon is how much time you have to invest your money. This is why we say being unique is the best investment strategy. Your unique time horizon must be established. when you start investing and when you will need to pull the money out is vital. If you are saving for retirement at age 65, your time horizon will be 65 minus your age. If you begin saving for your child’s college during her infancy, the time horizon of that investment plan will be about 18 years.

Time horizon determines how much time you have to take advantage of compounding. Also how liquid your investments should be, and how risky they can be. If you are 40, you still have 25 years until retirement. This means you can invest in growth stocks, because you will have time to wait out the down times.

On the other hand, if you are already retired, you will want to have more easily accessible investments that preserve your capital and are much less risky. This is because you can’t afford the large downturns of more volatile investments. Another thought is locking up your cash might leave you financially stressed.

You are unique and this is why your investment strategy should be as unique as you are.

 

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