It is a common misunderstanding that investments have to be difficult, with complex finance theories and bombastic sounding financial words. In fact, it is a known fact that all these “gimmickry” are intentionally done to make retail investors think that investing is difficult, and it is better to rely on “financial planners” and “fund managers”. Nothing could be further from the truth.
In fact, even Warren Buffett has claimed that if you just buy the index of a stock market (AKA just buy a bit of every stock in the stock market), the results on almost every occasion fare better than the fund managers you typically invest in.
The reason being:
- They are average investors, just like you.
- The only difference between you and them is their financial jargon and sales tactics.
- Their fees are exorbitant, and often suck any profits dry and leave you in a net loss position.
- They practice the art of “paying themselves first”, which meant charging an “administrative fee” even before any money has been made!!
All these actions imply 1 thing: Trust your own gut.
And by trusting your own gut, i meant trusting your own judgement in investments. In 90% of cases, all you really need to know, is to understand the concepts of spotting great companies. And I am going to share this extremely secret formula that all fund managers do not want you to know, here today.
The secret, is actually not much of a secret. It is more often common sense. However, it is true that common sense is in fact uncommon!
So without further ado, let me offer 1 tip to spot a great company to invest in! This is one method I often use to discover great companies, that gave me amazing returns.
- Get to your local supermarket, and do some shopping.
- Buy your common groceries like you always do.
- Before opening up the packages of your items you have bought, flip over to the back of the packaging, and find out what’s the name of the manufacturer.
- Get the name, and utilize Google to search for the company and their share price, to find out if they are a listed company or not.
And that’s about it! Sounds too easy? Yes, because investing is not supposed to be difficult. But to explain what I mean by above:
Your typical items that you have bought regularly, are expected to be your favorite products that you regularly use and consume. They are your regular purchases for a reason, be it its quality, or affordability, or maybe you just like their brand or packaging. Whatever it is, there is something that made you buy this product instead of another. And, usually all these products are also commonly the favourite of other consumers like you as well.
And by finding out whether it is a listed entity, you always ask yourself a question: “Is this company listed?” With that mindset, you have actually begun opening your “third investment eye”, which allows you to start spotting all these companies around you that are worthy to invest!
A great example would be Coca Cola. Almost everyone in this world has consumed this beverage at least once in their lifetime, and I am sure almost everyone will agree that it tastes great. However, have you actually asked yourself whether this company is a listed company or not? Why not check out in Google and find out?
Guess what, it certainly is. And as you can see from their share price, if you have bought them since the 1990s (if you are a baby boomer), you would have made at least 5 times your investment, and that doesn’t even include the yearly dividends that they pay you just to keep your stock.