Nature teaches the spectator how things in life are supposed to work. Every natural sight that you come across is based on pre-designed principles. These principles provide the observer with sufficient guidance on how things work. Similarly, gardening has taught me a lot about investment and personal finances. You sow a seed, water it, prepare the soil, nurture the fragile plant, save it from extreme weather conditions, and have patience. With all the right efforts in the right proportion, soon you get a lovely product that makes you immensely happy.
The same is the case with investments. You invest in some projects, put in the right efforts in the right proportion, have patience and you reap profits. The similarities between the two are so many that these can guide you to get your investment inspiration. Hang in just there and let us explore how nature inspires us for our investment-related matters.
First comes the planning: If you want to grow beautiful plants to spellbind yourself you just cannot randomly buy any seed and put that in soil and expect paradises. So what you first need to do is planning. I cannot emphasize the importance of planning enough. It is just not gardening that needs planning but anything in life that is motivated by the end results needs planning. You decide your motivation behind gardening and start accordingly. The same is required of you when you desire profits of your investments that is proper planning. Analyze your end desire and plan from end to beginning. Planning will help you at all stages of your investment to profits journey and you already know who to deal with any sort of shortcomings and falls.
Then comes the need for Diversity: So you must not put all your eggs in one basket. You are, of course, not growing a forest in your garden with all the same tall trees. Someone with a good taste in gardening may also not go for same kind of flower all over the place. When it comes to investment you should keep some room for contingencies as well and not invest all that you have on a single project. Instead have a portfolio, this way your investment will be at a lower risk.
Diversity in gardening saves your garden in case any of the plants start dying for any reason. The other plants will compliment your loss similarly diversity in investment will make up for fewer profits and losses you may face.
Do you know what a “Dividend Plant” is? The best thing about a dividend plant is that you just need to dig the soil, divide the plan and multiply. The basic plant does not die and you have a new one as well. The same goes for investing in the company’s stock, given a well-researched selection of stock, your initial investment remains safe and you earn dividend income as well.
You might want to start your own business or invest in a risky market that offers high returns but having an investment in multiple projects is a safer option. You must consider investing a portion of your resources in safer options like buying shares of a company.
Balance is required: With time your gardens may get full with one or two types of plants because these plants responded well to the available conditions. But still to maintain the diversity you have to think about rebalancing so that other plants may not vanish. When you decide a portfolio for your investment, say you invested in 70% in stock and 15% bonds. The bullish trend in stock will not continue forever so you need to sell some of the stock back to the market to maintain balance. The investment market is not 100% predictable and a balanced portfolio is something to desire if you are not a risk lover. This balancing and rebalancing will help you avoid any expected or unexpected huge losses.
Even if you are intimidated by the bullish trend of the market of a financial instrument and you are happy to take risks still have a little portion of your income invested with a rather safer option.
Get your Hands Dirty: You just cannot create a beautiful garden without getting your hands dirty. You have to do lots of work with your own hand in the garden and that too with love and dedication. Similarly, you cannot just invest your money and be carefree. You need to take care of your investment and work towards profit.
It is understandable if you have invested in a business project but you might think what am I expected to do if I invested in money market securities, etc. which do not require my direct efforts? That is right the bonds, securities, etc. do not move up and down due to your efforts it depends on the market but the value of your portfolio depends upon your effort. Your efforts will also determine the value of your portfolio, not the market alone. So get your hands dirty here i.e. study the market, seek professional advice, etc.
Have a Check on Weed: weeds may also be green but it may deprive your plants of proper nourishment. You do not want your investment to develop any weed sort of qualities. Keep a check on your investment and cut or burn if you find any signs of weed in your investment.