It has come to my attention that most people equate financial freedom to earning big money in the stock market/forex/etc. Once again, I emphasise that views expressed here are merely the writer’s opinions and should not be taken as any form of strict professional advice.
All I want to say that after many months of demo trading, research and watching friends live trade (yes, I admit to not participating in any live trading myself), I found out that trading wasn’t my thing. Reasons being:
1. There is a time commitment. When I traded in forex, there was a need to constantly check back with the pips I’ve bought. It was psychologically difficult to ‘buy and forget’ for me. It was difficult to stop constantly checking my trades, Even out of the house.
2. The psychological battle was immensely hard. It’s definitely not easy to keep your cool as the value of your units go down in the hopes of it rising up. It takes a lot of faith and belief in your trading methods to do an actual trade.
3. LOTS of homework to be done. True, not like there isn’t any investment that doesn’t need prior research, but to trade in stocks and shares require a huge amount of dedication before even investing.
4. Unit trusts. Although alleviating the need to do the research, the returns aren’t high and the time frame is long.
My point here is not to emphasise that trading is bad, but that there are plenty of other ways to invest your money. Don’t limit yourself to just trading in markets. Here are some examples:
1. INVESTING. There is a huge difference in trading and investing. Trading involves buying low and selling high, coupled with constant monitoring of the market (or getting someone to monitor it for you). Investing refers to taking your money and investing in a business, be it an Initial Public Offering (IPO) or during the early potential stages of the company. The money is then left for a few years (decades even) before withdrawing it. Of course, plenty of homework must be done and you must trust the company you’re investing in.
2. PROPERTY. This is a double-edged sword, where it’s easy to earn a comfortable passive income from investing in property but coupled with the risks of insurance, poor tenant management, high captial required and depreciation of property (refer to Singapore property cooling measures). However, withgood property brokers and managers and a bit of homework done, investing in property is and has always been a good way to create the passive income needed for retirement.
3. BUSINESSES. Creating your own business is one of the best ways to become your own boss and generate passive income. However, statistics show that 9 out of 10 businesses fail in the first 5 years, and even so most of these businesses that survive are only barely able to cover costs. However, with the right motivation and effort, businesses can prove to become very powerful tools to push towards the dream of financial freedom.
I’m not saying these are the only ways to earn the money to retire. There are definitely plenty of other ways to do so, especially in this changing Information Age that we live in. Further examples include creating Mobile Apps, investment banking and also staring in Youtube. With all that said, keep and open mind. Someone’s method of getting rich need not necessarily equate to the best method for you to become rich.