FP Article 21
The Power of
by Rajen Devadason
Conservative investors sleep well.
Philip A. Fisher
risk-reward relationship is pretty
much inviolate. You can't expect to
generate higher than normal
investment returns without being
willing to stomach - at least for a
season - larger than average
probably already know that. What you
may not be aware of is that the term
'risk' in investment science doesn't
quite mean what it does in real
difference and acting on that
knowledge can be profitable.
In day-to-day living, when we talk about risk,
we are usually referring to the possibility of
something nasty happening to mess up our
existence. For instance, crossing a busy highway
or expressway on foot dramatically raises your
odds of meeting your Maker sooner than expected!
But in the realm of investing, taking on risk
simply means purchasing investments that are
volatile - meaning they rise and fall in value
This is an article on conservative
investing. I hope you enjoy
reading it. But if it isn't what
you're looking for, you're welcome
to search for something that better meets
your needs. Thank you for allowing
me to serve you.
If you wish to learn more about
investment risk, read
this article or
take this eCourse.
Right here, however, we're going to consider an
interesting irony that exists in the economic
Those who organise their affairs
in a conservative manner often inject sufficient
financial strength into their lives to permit
them to invest aggressively, load up on
investment risk, and eventually reap huge
But those crucial benefits most
often accrue to people who act conservatively
out of an intelligent understanding of financial
mechanics and not out of wide-eyed terror! It's
vital that you understand the difference between
the two groups of conservative individuals.
Our world is filled with those
who are so frightened of taking on any risk
whatsoever that they only keep their excess
funds in the bank. On the plus side, they never
lose any money... at least on the surface. On
the minus side, they lose ground to inflation
every year that they act in this predictable,
but ultimately economically unwise, manner.
There are also other individuals
with heightened gambling tendencies who embrace
risk even when they are unprepared to deal with
the incredibly steep ups and downs that capital
markets tend to throw at all of us - the
prepared and unprepared alike.
Only those who possess the best
traits of each mutually exclusive group run the
highest probability of long-term financial
success. Here are 3 such traits:
Discipline - to first build up large cash
reserves, including a fully funded emergency
Intelligence - to commit to learning how
the economic world works.
- to gradually accumulate funds while watching
carefully for prime buying opportunities.
When stock markets surge, it
seems as though everyone suddenly metamorphoses
into a super-investor. But what goes up,
invariably comes down. In truth, it takes gobs
of discipline of the right sort to be willing to
painstakingly lay the groundwork for a lifetime
of beneficial investing.
In the economic world, there is a
natural progression from saving to investing to
speculating to gambling.
In my opinion, gambling is stupid
and speculating is unwise. Saving and investing,
on the other hand, are worth learning about and
then actively carrying out! However, before you
invest, you should save.
And the first goal of saving is
to build a sizable emergency buffer fund. Read
this to learn how to save,
this to learn how to
establish an emergency buffer.
Often the people with the highest
IQs have the smallest bank balances. I'm not
sure why that is, but this widely observed
phenomenon doesn't negate the absolute truth
that investing is most successful when it is
most business-like, and it is most business-like
when it is carried out in a manner that is both
intelligent and wise!
How do we grow intelligent and
eventually wise? We begin by reading!
I'm a huge, unapologetic believer
in the uplifting power of reading. So, if you'd
like to read your way to greater investing
help yourself to this free
Most of us are impatient. We're
impatient with ourselves, our spouse, our
children and our friends.
Working on developing patience is
a lifetime task. But if you hope to blossom into
a supremely successful investor, then you must
nurture patience in that area as quickly as
possible. The best way to do so, financially
speaking, is to develop a clear strategy that
links your saving and your investing goals.
In my day-to-day work as a
consultant, probably the greatest value I bring
to my clients is the development, implementation
and monitoring of such personalised strategies.
All this work requires deep rumination.
Similarly, I suggest
you spend time alone thinking about your
financial goals and working out a long-term
strategy to reach each precious one.
I wish you well in this noble
If you would like to
immediately purchase a copy of my
financial novel Liberty - From
Debt-Slave to Money Master,
you should still first read what others have
said about it -
teaches 2 powerful strategies for getting out of
personal debt through the enjoyable (and
interestingly linked) fictional stories of 3
young men who have made very different types of
serious financial mistakes.)
Finally, if you're a Malaysian who is
between 35 and 50, is very, very, very serious
about life planning and financial planning, and if you want to learn
my consulting services,
you may do so
© Rajen Devadason