The Smart Investor's Guidebook: Investment Strategies That School Never Taught You

By Bamidele Adewole

Where can I invest my accumulated savings to get maximum profit? Which asset yields the most returns? What kind of investment will give me the quickest returns? Where can I invest my cash with the least risk of loss? What is the difference between investing and trading? How can I spot a potentially bad investment? Many people have had to ask themselves these kinds of investment related questions and more at some point in time.

 

Perhaps you are presently confused about the right kind of investment to make too.  This book, 'The Smart Investor's Guidebook' written by Bamidele Adewole, provides the simplest and clearest answers possible to the readers' investment related questions. It offers explanations for overcoming limiting beliefs about money, making sound investments, building wealth, and retiring early, using lessons from renowned investor, Warren Buffet.

 

It also touches on the act of effectively using your intuition to make smart investment decisions.  'The Smart Investor's Guidebook is a 6 Part, 15 Chapter guidebook with each part dedicated to helping the reader find answers to their everyday financial questions. The terminologies and strategies of investments are explained in the most elementary level such that even without prior financial education, a reader can comprehend and use it to make smart investment decisions. Simply put, this book contains investment lessons that the school never taught you.  With the sound financial guide provided by this book, a novice can become a smart investor in no time with some discipline, financially literate or not. And that ultimately is the goal.

• Language: English
• Publisher: Bamidele Adewole
• Release date: Oct 16, 2020
• ISBN: 9789785808728

Book preview

INTRODUCTION

Over and over again, I have seen many people make investment mistakes that end up confining them to the penury. And there are those who have given up on ever investing their hard-earned monies again because they have had their fingers burnt in some bad investments in the past. One thing I know for sure is that anyone can acquire legitimate wealth with the right investments. Being a billionaire investor like Warren Buffet is not magic, neither does it take luck; no one ever amasses real wealth by just being lucky, just as no one ever remains poor simply because of ill-luck.

Investing to make wealth has its rules, and that is why I wrote this this book, to help you build and grow your wealth, through profitable investments, and in doing so, improve the quality of your life.

In the first part of this book, I explore the mental paradigms (limiting beliefs) that hinder many from making rational financial and investment decisions. Such beliefs make them live safe but also makes them live poor. You cannot talk about being a SMART INVESTOR if you have limiting money beliefs holding you back.

On this foundation, we build a time-tested guide on making proper investments at any period of time, and in any part of the world.

In the second part of the book, I look into the concept of wealth creation and discuss the various strategies to grow income through investments, with critical attention to the broad categorizations of investments and wealth creation.

In the third part of the book, we drill down into the specific aspects of investment strategy, by examining the asset classes available, and how smart investors can position themselves to leverage on these options. The purpose of this part of the book is to expose you to detailed and comprehensive guidance on how each asset class operates, the applicable risk factors, and the potentials for returns.

In Part Four, we look at the concept of investment risk and how best to mitigate, or at least, manage it. The reality is that there is a level of risk present in practically everything you do in life, and investing is no exception. However, through techniques such as diversification, which I discussed in detail in this book, you can manage your exposures to investment risks, to a large extent.

The penultimate part of this book examines how to use the techniques discussed in Part Three to plan towards early retirement. Emphasis is laid on early retirement because I wrote this book is to help you achieve financial freedom, through proven investment strategies, so that you can have the time to enjoy life the more. This objective is therefore best attained through early retirement – hence the need to dedicate a part of the book to this topic.

The final part of the book puts it all together by providing general guidance on how to use intuition and the power of the mind, in addition to sound investment strategies, to make intelligent investment decisions.

While no investor, regardless of their knowledge or expertise, can claim infallibility when it comes to investing, I do hope that by taking cognizance of the content of this book, you will have been equipped with certain information, skills and strategies to adopt in your journey to becoming a successful investor.

PART ONE: WHY YOU MAY NOT BE RICH

CHAPTER 1

LIMITING BELIEFS

Like many other things in life, being wealthy or poor, is a choice people make, either consciously or unconsciously. Through our everyday thoughts, decisions, and actions, we chose our financial position- wealth or poverty. I deliberately mentioned thoughts first because everything starts from our minds, the seat of beliefs. Perhaps that is why the Bible said as a man thinketh, so is he (Prov. 23:7).

Your financial status has a strong link with your mindset. Wealthy people have a wealthy mindset, the poor on the other hand are held back by their poor mindset exhibited in limiting beliefs.  Limiting beliefs, I have discovered, pose a bigger obstacle to making smart investment decisions than any other factor.

What is a Limiting Belief?

A limiting belief is something you believe to be true, which limits you in some ways. It could be an idea, thought or perspective that you hold on to for a very long time because you believe it to be correct, but in actual fact, it is holding you back from achieving what you have the potential to achieve. In essence, limiting beliefs are mental obstacles that hold people back from reaching a goal.

According to National Science Foundation, our brains can produce as many as 50,000 thoughts per day. You choose what you think about daily, and these thoughts end up becoming your beliefs.

We all have limiting beliefs, everyone does. But the level to which we allow them dominate our lives is the level to which we can rise to attain success.

Consider the following thoughts:

I am not qualified enough.

I must go to college and acquire a degree before I can be successful.

I am not worthy.

Only people with connections get top jobs in Nigeria.

I am too old to do this.

Investing in Stocks is a bad investment. It always crashes.

Real Christians should not be wealthy

These are common beliefs that when objectively scrutinized, are not true, but because we hold them to be true, they mess with our chances of achieving our potentials.

"Man often becomes what he believes himself to be. If I keep on saying to myself that I cannot do a certain thing, it is possible that I may end up really becoming incapable of doing it. On the contrary, if I have the belief that I can do it, I shall surely acquire the capacity to do it, even if I may not have it at the beginning."- Mahatma Gandhi.

Limiting thoughts affect our lives in general, and our finances in particular. They are the reason why many people will never take investment risks that can make them rich.

Here is the thing: after man’s psychological need for food, water and shelter, the next most important need in Maslow’s Hierarchy of Needs is safety. Apart from physical safety, we want to be financially safe, hence when it comes to investment, most people are not going to invest their money on something that they believe will result in a loss. Why would you even venture into acquiring an asset if you genuinely believed that the asset will depreciate in value and fail to deliver on its potentials?

Most people wear their limiting beliefs with conviction and pride. These beliefs come from a variety of sources: school, religious teachings, personal experiences, etc. It is even worse when such limiting beliefs are cultural, acquired from parents or one’s immediate society. I will deal with this in details in Chapter 2.

As humans, we must continually learn, but it is important that we learn the right things.

"If you don't change your beliefs, your life will be like this forever.

Is that good news?"

- W. Somerset Maugham

How Limiting Beliefs Affect Your Life

Limiting beliefs have an undesirably profound effect on our lives. They affect our lives in so many negative ways, and we often don’t realize this; in short, they are obstacles on our journey to success.

The journey to success has some major landmarks that I need you to first identify.

Clearly decide what you want.

Have a clearly defined goal, without which you will just be running around in circles. Decide what you want and pursue it.

2. Do something to make it happen.

It takes deliberate, well-coordinated actions to attain any set goal. You want to be a millionaire in dollars? Great. But you don’t wish it into happening. You'll have to do something to accomplish anything meaningful.

3. Adjust your approach as you gain new experience.

Sometimes, you don’t have all the answers at the beginning. In fact, no one does. Some people have clearly defined goals but lack the expertise to execute them. That is fine, no one has all the right answers. Start anyway, and if needs be, modify your approach as you move on. If you fail, learn from that experience and do it another way, again and again until you get the results you want.

4. Keep going until you're successful.

The most successful people are not those who never tasted failure, but those who pick themselves up every time they fail, and move on. Simply put, don’t stop until you get it.

As simple as these success Landmarks are, quite a lot of people don’t attain them. Many people actually attain Landmark one and remain stuck there because they are