My Two Primary Goals As An Investor

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As an investor, which means I have more cash on hand than needed to pay for my day to day living, I’m somewhat conservative. For me ’savings’ - which its the money you accumulate monthly because you don’t want or need to spend it is very important - I’m old!

Look at a ’savings’ example from my point of view and experience. If your day job nets you $1000 per week and your rent, food, car and other expenses cost you $700, the amount you don’t spend which is left over may be labeled your savings.

Savings is what you put away for future use. This ’savings’ is what you should be using to invest, not your weekly income, rent gets paid first before investments. Its important for me to clarify that ’savings’ is money I don’t touch. I have a comfortable life and the amount left goes away into accounts I don’t have ATM ready access to so that it really becomes a nest egg.

Find out what you need to live on and then block off the rest as ‘ savings’ or investment’ capital. This will accomplish two things, first your bills are paid and you should be living a comfortable stress free life. Second it portions off the excess money, segregates it and labels it as savings/investment money. That money is different from your everyday expenses and you have to place it somewhere you will say, “Oh, I can’t spend that money today, that’s in my savings account.”

For the purpose of this post let’s simplify your amounts which are to be put into savings and invested. As an example, this week you end up with $300 in savings so don’t carry it around and spend it, place it somewhere you don’t have quick access to it for spending. Once you have some savings, you can objectively figure out what to do with your nest egg.

Primary Goal Number One

Preservation of capital. This means if you started the month off with $300 in saving, the worst balance you should ever finish a month should be no less than $300 in your savings.

Never go backwards with your investments, never lose money. That should be everyone’s number one goal when saving or investing, do not lose your hard earned money.

If you worked all week long to earn that cash, spending it means you have to work another stretch to earn it again. Saving it means that’s one less week of work in your life. Save save save, make sure that whatever you ‘invest’ in or place your funds in for the purpose of preserving and growing them, you will never end up at the end of the week with less than you started.

Take secure calculated risks with your investment dollars but always be sure, as your primary goal, that you are preserving your capital. If you start your week with $300 and end it with $300.01 you have accomplished your primary goal and you are half way to a wealthy future. The following week, if you earn only $1.00 and end the two weeks with $301.01, again you have achieved a very powerful goal. You are half way there…

Primary Goal Number Two

Make certain that in your daily saving program you account for rising costs and daily living expenses. If the cost of goods around you is rising, gas, food, clothing……you will want your saving to rise and keep up with the economy. The cost of a barrel of oil has gone up over $10 in just the past few weeks and that will translate into higher gas prices, higher home heating prices and even consumer goods costing more. So, if your savings is only earning 2% per month and the cost of everything around you has risen 10% in just a month, again you will be going backwards with your buying power.

In part 2 I’ll take a look at how investing in precious metals such as gold and silver could not only preserve your capital but achieve the growth you need in order to outpace rising costs.

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