One Key Reason Why Value Investing Is NOT For You

Is Value Investing For You?

Value investing works. It is a tool for us to reach our financial goals. Many millionaires are created through value investing. Many billionaires are value investors. However, is it all that simple? Is value investing for everyone? Is value investing for you?

The short answer: No. it is not for everyone. If it was, everyone would be millionaire investors by now. Value investing is only suitable for some people and it depends on one key characteristic.

And no, it is not about how much money you have to start with. It is not about how much formal education you have. It is not even about how old you are, after all, Warren Buffett started investing when he was seven! (If you do not know who Warren Buffett is, try googling him.)

You Are The Key

First of all, value investing would only work for you if you have the right TEMPERAMENT. More specifically, you need two very important traits. Furthermore, you need to have patience and you need to be able to control your emotions.

But why? Why do you need to have personal qualities to learn a financial skill? It is because investing is all about your relationship with your investments. Like all relationship, how you manage your reaction to it is the key to a successful marriage investment journey.

Why Patience?

Value investing is not a get-rich-quick scheme. It will NEVER make you rich overnight. What it might do is to help you grow your wealth slowly, over a long period. So, if you are thinking of getting rich tomorrow, you have come to the wrong site. But if you want to learn the skill to control your own financial freedom for the rest of your life, value investing is for you.

Thus, value investing would work only to those who allow it the TIME to do its magic.

Control My Emotions?

Yes, over the course of managing your investments, you will experience excitement, greed, pride, fear, panic and satisfaction. How well can you control these emotions would have a direct impact on how well your investment might end up to be. We need to keep our head leveled when making any investment decisions. We would need to be able to resist the temptation to jump into the current hottest stock just because everyone is making money from it. In addition, we need to fight our fear and be able to invest in the market during a crisis when everyone around us is losing money and your portfolio is declining in price every day. Managing our emotions is hard, and so those who let their emotions control them would find it hard to succeed in value investing.

Think you have what it takes? Better yet, do you have some experience in being a value investor? Share with us your investing stories below.

Stanley Lim, CFA

Stanley Lim has spent the last decade in the investment industry. Over the course of his career, he has kick-started a few businesses, worked in the family office industry and most recently in the investment advisory industry. He has been a writer and analyst for The Motley Fool Singapore from 2013 to 2017. He has written close to 2000 articles online, on investment education and market analysis. He is the co-writer for the upcoming investment book: “Value Investing In Asia”, scheduled to be published late 2017. Stanley is currently the chief editor of Value Invest Asia.

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