It isn’t hard to become a successful investor these days. Awesome investing tools are available 24 hours a day, 7 days a week to anyone with a computer, a willingness to learn, and access to a bank account. Just spend less money than you make, and then invest the difference. (Links to these investing tools are at the end of this article.)
But to become a great investor, you need one vital skill that a computer can’t teach a human being. This article is about the #1 skill of successful investors: The ability to see over the horizon in your own life.
On Saturday, I heard something that inspired this post. I had a little free time, so I grabbed my computer, relaxed on the couch, and began to surf my favorite internet sites: (Craigslist; Minnesota Vikings; Personal Capital; Twitter; Facebook; ETC). But something caught my attention when I checked Yahoo Finance.
Warren Buffet and Charlie Munger were on my computer screen looking at me. I read the headline above their faces. I discovered Yahoo Finance was broadcasting the entire Berkshire Hathaway Investors Annual Meeting live. I grabbed my headphones, and eagerly tuned in. There isn’t a better way to learn how to invest than to listen to two of the greatest investing minds that have ever lived talk in length about their investing decisions. (I’ve included some great links to learn more about the meeting at the bottom of this article.)
During a break in the meeting’s action, Yahoo’s coverage moved to their set. To fill the time, the hosts were interviewing the founder of an actively-managed mutual-fund who started his fund in the 1980’s. The fund they were discussing manages around $10+ billion dollars. The manager, (I missed his name), said something that stuck with me long after the camera’s left him and zoomed back to cover the Berkshire Hathaway meeting.
He described was one of the most valuable skills that one needs to become a successful investor and wealth-builder. He said: “Investors are just people trying to see over their own horizon.”
I thought the imagery was beautiful in this phrase. The description of a person’s “horizon” reads almost like poetry. It made me realize that the ability to build wealth, and become a successful investor, is dependent on an individual’s ability to look into the future and successfully predict what’s going to happen on the other side of their horizon.
As an experiment, let’s use this revelation to test the ability of your own imagination. After all, the skill: “to see over your own horizon” is 100% created by the creativity and power of your imagination. Your imagination is a massive tool that can help you improve your investing ability.
The #1 Skill Of a Successful Investor:
Answer this question to yourself: How often do you think/meditate about the overall landscape of your life? How often do you push your imagination to it’s extremes to visualize what’s on the furthest edges of what you think, know, feel, and want, in your life?
These edges of what you know, and what you don’t know, is where the horizon of your own life lies. Successful investors spend a lot of time thinking about this edge where reality of the present, and the unknown of the future, intersect and meet. Successful investors simply use the power of their imagination to try and predict what’s coming over this horizon in their life. Their goal is to either avoid an impending financial disaster, or maximize the potential of an awesome financial opportunity.
Here are some real-life examples of how successful investors use their imagination to see beyond their own horizon, and predict what actions they may need to take to achieve their dreams:
How a Successful Investor Buys Real-Estate:
A successful investor doesn’t just buy a house because it’s pretty and they can qualify for a mortgage, and everyone is pressuring them that it’s the right thing to do. A successful Investor, before making an offer on any house, tries to visualize what’s over the horizon in their own life first, so they can try to predict if this house will be a good fit in their present, and future life.
They ask themselves questions like: Does the mortgage payment make sense for me now? Will the payment still allow me to reach my goals in five, ten, or fifteen years? What will the neighborhood this house is in look like in 10 years? How will my family needs change in 7 years? Does the school system fit the needs I will have for my kids, even if I don’t have any kids now? Will I get restless and tired of owning or living in this house after a few short years? If things need to be fixed, am I going to be motivated to learn how to fix them? Is my future-self going to enjoy doing the general maintenance projects that need to be done?
You may want to test this experiment every time you contemplate tying all your cash up into a house payment or risky investment. Challenge your imagination to try to see over your own horizon, so you can visualize and make a plan for what’s next in life. Ask yourself: Is this your forever home? Or will you want to travel more? Or will you want to buy a vacation property eventually to escape a winter season?
Personally, my wife and I see ourselves wanting to leave Minnesota winters eventually. This is why we choose to live in a smaller house, and take on a smaller mortgage payment, so we can save some cash while living in our primary residence to eventually buy a ski or beach condo eventually.
Do you see what I am trying to get at? A successful investor doesn’t just try to solve their needs of today. They are always trying to see over the horizon of their current life, so they can imagine and predict their future needs, and see how an investment will fit their needs of today, tomorrow, next year, and in a few decades from now.
How A Successful Investor Buys Stocks:
The same rules apply when you make the decision to invest in stocks and retirement accounts. A successful investor isn’t overly worried about how the stock or fund will perform in the short-term. They are trying to see over the horizon of their reality today, to try and imagine what that stock will look like in the unknown future. For example, if the investor is 30 years old today, a successful investor is trying to look over the horizon to see what their financial needs will look like when they are 40, 50, or 60 years old.
A successful stock investor is always trying to imagine what the dividend payment will look like after 20 or 30 years of compounding. They are always trying to imagine what their own household, and America as a whole, will look like in the future. They always trying to solve their needs of today, while simultaneously trying to see over their own horizon so they can get an idea of the needs they will experience in the future.
A successful investor is always trying to visualize what’s on the other side of their own horizon in their life. They are trying to visualize this, so they can imagine and predict the world, and the version of themselves, they will eventually encounter when they cross into that horizon in an older age.
Imagination and prediction are two vitally important skills that can help ordinary people become successful investors in life. Combine this skill of foresight, with the financial tools I’ve listed in my Five Best Financial Investments To Become a Millionaire article, and anyone with a willingness to learn and discipline can become wealthy beyond their wildest dreams.
Next time you’re bored, or find yourself tempted to turn on the TV or internet, to relax and turn your brain off, try this little exercise. Try to meditate on your life, and try to see what may be coming over your own horizon. Do you like it? What do you want to change about it? Once you find what’s there, you will know what to prepare for.
How To Become a Successful Investor:
Find a peaceful spot to sit. Stare off into the distance. Imagine the life over the horizon of the future that you cannot see. Or even better, meditate or pray until you can see the life you want to live. Once you visualize the life you want to live, you can start planning and preparing to build that life into existence as the future begins creeping slowly toward you.
Once you know what life you want to live, then start taking the next steps to improve your relationship with money, and learn more about money. Start saving and investing money. Make a goal to build wealth so that you can stop doing the things you hate doing, so you can have more time and energy to do the things you love doing. Live the life you dream about, and go on an adventure to do the most important thing there is to do in life: Pursue Your Purpose in life.
In closing, successful investors all have this ability that helps them build wealth. This is it:
Successful Investors have the ability to look over the horizon in their life, and financially prepare for their future.
To build wealth, become a person who doesn’t just see and plan for the needs in their present life. Challenge yourself to see a bigger view. Meditate until you can see the furthest horizon’s edge in your life, and then use your imagination to try to see beyond that. Being able to plan for the future, even though you can’t see it, is the #1 skill all successful investors have.
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