Happy Women’s Month!
Many would say that fashion and investing are at two opposite sides of the spectrum. However, they have more in common than one would think.
- Planning
- Decision making
- Navigating trends
- Finding good value for a good price
Building an investment portfolio is like building your wardrobe. You must start somewhere. Whether that be your first debit order to making your first major withdrawal, your investment portfolio is not built over night, similar to that of your wardrobe, they take time.
During almost every shopping spree, there is one saying that is always guaranteed to be said, “let’s just get the basics”, every person requires them, most shops have them, and every wardrobe needs them. Whether it is a good pair of socks, a crisp white t-shirt or a comfortable pair of jeans. They may not be the exciting item in your cupboard however they can be the most essential item.
The same applies to investing, every portfolio needs it foundations, this is the diversification within your portfolio. Diversification is investing in various asset classes to lowers the levels of risk and volatility. The risk is not eliminated but there it does reduce the unnecessary risk. Like your classic white t-shirt reliable, versatile and always there when you need it.
From animal print to bell bottom jeans, Stanley flasks to the Crypto Craze. Life is a constant cycle of change. Fashions trends come and go; music taste evolves and investing fads vary. One must try block out the noise and remain focused to your long term financial goal. Alough it may be tempting to follow the crowd, it is important to note that not every investment trend belongs in your portfolio, just like not every fashion trend belongs in your wardrobe.
Your wardrobe changes with the seasons, it is altered according to summer, winter, autumn and spring. It will change from a light jumper over the shoulder to a beanie and scarf, these changes in your everyday attire evolve to larger changes within your wardrobe. The clothes you wore when you were younger may not be the same clothes you wear now. These changes resemble the different stages in your life and how slight adjustments can have a bigger impact in the long term.
Just like your wardrobe, your investment strategy should be adjusted according to your life stage. Whether you are saving are for retirement or purchasing your first house, your financial plan should be adjusted accordingly. Even the slightest change can make a meaningful difference in the long term.
When shopping for clothes do you prefer to buy quality or quantity? There isn’t a right or wrong answer but rather circumstance dependant. It takes time to find good quality for the right price. Investing has a similar principle. You can have quick gains, but wealth isn’t built over night. It is the patience, consistency and well-thought-out decisions the help you reach your long term financial goals.
Overall investing, just like fashion, not about the latest trend or the most expensive item. It is influenced by the foundation you start with and the adjustments you make throughout to help you reach you long term goal. Just as a timeless wardrobe will never go out of style neither does a well-constructed investment portfolio.
