Investing is perhaps one of the most exhilarating activities we can engage in as human beings. The primary component, to make your money work for you is a very exciting and lucrative activity, but, much more than that, being able to support initiatives and projects you believe in is indescribable.
However, we all have heard stories of people with lack of experience investing who have lost it all. That’s why at Gutierrez Group, we decided to write this article to reveal some of the high-level truths about investing that are not so intuitive or easy to find online.
Remember that all of the concepts we will mention are a bit unusual, but, rather than take them to heart, try to identify the principles that better work for you and apply them in your investments.
1 – Human beings are irrational – And that is a problem for investing:
Robert Greene, a world-renowned author and consultant, identified as the most important law of human nature that we are primarily emotional creatures, and therefore, some of our decisions are irrational.
All of us like to think of ourselves as creatures of well-grounded processes and rational decisions. However, as Greene explores and identifies in his book, this is just not possible. Unless we have experienced a lot of time meditating or doing mindfulness, and even if we have, our reactions are not always 100% rational. That is why you may find people who are reluctant to do something that is obviously good for them, such as exercising at least three times per week and eating fewer carbs.
As a result, when we think about investing, one of the primary concepts we need to master is to overcome our desire to make rash decisions. Instead, having a process that is as predictable as possible tends to work better for most investors.
That is why, when investing, it is better to have a third party involved that can look at your investments from the distance, and provide a more rational assessment of the situation.
You may think this is not very insightful. Of course, an investment manager will tell you his or her services are crucial. But, they will never tell you the reason why their advice is so important is that it is easier to be rational when you manage a portfolio that isn’t your own. Professional investors are constantly training the logical parts of their brains to look at investments with perspective. And so, their input helps you as the main stakeholder to make better decisions when investing.
Having said that there are plenty of investors that manage very successful portfolios by themselves. But, it is crucial for us to know we are biased and constantly battling with our irrational selves is much harder on our own.
2 – Diversifying is crucial because, in reality, all investments are risky:
No investment firm is going to tell you upfront that investing is a risky activity. That would greatly hurt their business. However, as most investors know, it is crucial to keep in mind that even if the risk is minimal, it is still there. That is why diversifying is an essential skill if you want to reduce your risk and improve your chances of growing your capital.
This is precisely the principle behind the myriad of low-risk investments we have structured at Gutierrez Group. We know there is always some risk, but we make sure your portfolio is managed and diversified so that it is as slim as possible.
Remember that investing is essentially an informed bet on how profitable and risky an asset can become. Understanding the limitations and incredible benefits you can gain from investing allows you to be more objective. And, the more objective you are, the better you will be selecting how to diversify your investments, and ultimately, make more money.
3 – Humans tend to be short-sighted, and investing is a long-term endeavor:
Most investments take some time to become profitable investments. Again, no investment manager will tell you this upfront because the point of investing is to gain something, not to wait for something. However, there is a general awareness in the industry that all of us (humans) tend to be short-sighted and impatient, an incompatible trait with investing and making your money work for you.
Greene also touches upon this principle in his book The Laws of Human Nature claiming it is a natural surviving mechanism from our ancestry. And, if you think about it for a minute, it makes a lot of sense. When our biggest concern was where to get the next meal, our brain rewarded short-sighted and focused responses rather than strategic long-term solutions.
Investing, however, is a long-term game that requires experience and a steady process to make sure it becomes a profitable activity. That is why, when investing, it is essential to take a step back and make a rational assessment of what you are about to do with your capital. And, of course, that is why having an investment firm such as Gutierrez Group that can help you navigate the nuances of investing in Colombia will help you make the right calls and maximize your profits.
It is helpful to have a partner that can help you identify today’s problems and opportunities when funding a particular project. After all, investing also involves a deep understanding of history (why is this problem or opportunity even possible), and a great degree of foresight (how is this project going to shape the future of this region). To accomplish that properly, what better to count with an expert that can help you assess and conduct better decisions.
Did you find this information useful?
Please do not hesitate to reach out to us and let us help you grow your investment portfolio. At Gutierrez Group we designed some of the most exciting and innovative investment opportunities in the region.
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