In my role as a PR/IR consultant, I either spend a lot of my time contacting investors, or speaking with CFOs of ASX-listed companies about how to best engage investors.

The more I deal with investors – whether mum & dad, retail investors or fund managers –  the more I seem to scratch my head and wonder what an investor actually is, and what motivates an investor to invest in something. If you ask one, they might tell you about the investment strategy of their fund, what stocks their clients are into, or about their CommSec thrills and spills. They might tell you about the benefits of subdividing property or how stable government bonds are. But these answers don’t seem to go as deep as I’d like.

My understanding is that an investor is a seed planter, a grower, and a harvester – three ideas that seem to echo far beyond capital markets into the realm of philosophy. The principle of planting, growing and harvesting as a life practice is an ancient idea, a Biblical practice, and quite frankly seems a wise one to me. And that makes me think – what other investing principles can we learn from?

I decided to write this article with the aim of exploring some different characteristics of investors that stretch beyond financial markets and help us plant, grow and reap in our own lives.

Plant to harvest

This one is simple enough. Don’t spend your life doing anything that isn’t going to result in growth or long term fulfilment. Instead, spend your limited time and effort on things that will help you, your family, or your friends thrive. This is growing increasingly harder as the world tells us to enjoy now, spend now, and own now. But if we repeatedly invest in short-lived thrills that don’t compound or leave us better off, we may suddenly find ourselves without a harvest at all, and fall into emotional and financial debt.

An investor always plants to harvest. And I think that alone is a valuable lesson. Life is too short to plant on dust or rock and then miss the harvest.

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Diversify your life

What separates an investor from a gambler? A lot of research is one thing, and a good investor can look beyond their emotions and have confidence in the market’s ability to recover. The gambler can lose everything in one shot, but one thing that safeguards the intelligent investor’s risk of failure is a diverse portfolio of assets.

Likewise in our own lives, there are a lot of people who invest in one part of their life – one friend, girlfriend, or activity. When that relationship is good, life is good. But when things turn bad, everything is bad – they may even drift to the next thing until that goes wrong. Investors teach us that diversity in our lives is key to a healthy portfolio because it minimizes risk. When we have a wide network of friends, family, activities and passions, work and rest, even regular holidays, it means when one inevitably goes bad, we can rely on the strength of the portfolio as a whole to support us and curb any damage.

Ride the seasons

“Individuals who cannot master their emotions are ill suited to profit from the investment process.” – Benjamin Graham

Investing time, effort or money in any activity is an emotional process. It can may mean short term sacrifices and losses you may have to endure before the harvest is ripe for picking. Life, like stocks and markets, has its up and down seasons. We all endure struggles through life (winter) but in most cases, these pass and next thing we know the winds have changed, it’s spring and the weather’s getting warmer. One thing a smart investor knows is to put fear aside when the market crashes because historically, it gets better most of the time.

In that winter season, you may suddenly have an emotional urge to make erratic or fearful decisions to quickly apply a fix, but investors teach us to stay calm, be patient, and play the long game. These short term fixes may save you from short term pain, but could result in long-term loss and life, like markets, nearly always recovers.

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Know when to say no

This is an important point that ties back to point one: never invest in anything that doesn’t grow you or help your purpose. This starts with making well-researched decisions and never getting pressured into saying yes. Saying no may save you a lot of pain. Warren Buffett says it himself.

Successful people say no to a lot of things. Why? Successful people know their capacity, they do their research, and they always think big picture. They aren’t going to invest time into trees that bear no fruit. Instead, they move on, and quickly, to a new tree that does bear fruit. It would do us all well to be more like that.

And let’s be honest, there are a lot of things out there to distract us from our true purpose, and lead us away from what really matters in life.

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