When we talk about living your best life and getting the most out of every moment, one of the key factors is your mindset. An investment mindset is one where you focus on the future and possibilities, planning your energy and time now in relation to the future. So how do you develop a personal investment mindset?
A Personal Investment Mindset for a Higher Quality of Life
When you focus on developing yourself, you are making a commitment to a better future you. By its very nature, personal development requires an investment mindset. To better understand what that is, let's talk about it in financial terms. If you can understand how an investment mindset works for your money, you can start to see the benefits for a personal investment mindset.
Power of Compounding
A key to investing, both in finances and yourself, is the power of compounding. Einstein once said that compounding was "the most powerful force in the universe." The power behind compounding comes from its snowball effect. Every time something compounds, it grows exponentially larger. The amount of interest that is applied to your initial investment is added to that investment so that the next time it compounds, it adds interest based on the original (principle) amount and the interest that has already been added.
Let's put it like this. If you have $10 and your interest is 10%, the first time your investment adds interest you would add $1 ($10 + (10 *10%)). When this compounds over the next period of time and interest is added to it, we don't just get an additional $1. We get 10% of the $11 we have, making the interest $1.10 instead of the simple $1, making our total investment $12.10. If the investment compounds again, we would add 10% of the $12.10, meaning that we now would add $1.21.
In this example, with compounding interest we come to a total of $13.31. If we were just adding 10% of the original amount, we would only have $13. While this may not seem like a big deal for such a small gain, the power of compounding comes with time. After 10 years, we would have $25.94 with compounding interest vs. $20 without it. After 20 years, we would have $67.27 vs. the $30 we would have without compounding. That's already more than double what we would get by itself. Let's space it out even more and say we had compounding interest of 10% for 50 years. Our $10 would grow to $1,173.91. That's a massive 19.5X greater than the measly $60 we would get if we just added 10% of the original investment.
Why are we talking about this? Your investment in yourself is tied to these same principles. You are playing the long game, which over time will repay your investment. In the short term, you may only see some small differences. If you stay consistent with developing your own self and treating your own life as an investment, you will see greater and greater returns over time. The key is to start early (now) and to get your snowball moving.
If you have our mind set on the future, on the long term goals, purpose, and possibilities, you will know that the more you can invest now, the more you can get later. But this is going to require some work. There are too many people who chase the get quick schemes and look for life hacks that will spur them to 10X their life or shoot to the moon with their own goals. The problem with this kind of mindset is that it is usually a myth. It's just something a person is putting in front of you so that they can make more themselves.
I want to offer you the investment mindset that will bring you to long term success, that will set your priorities well and keep you growing. You will see progress now, but the payoff in the end is what you really want to see. You want to live on purpose and own your productivity. To own it, though, you have to make it yours. This will take you sacrificing your own time and energy on things that may not always seem like the best use of your time. It may take some financial or physical sacrifices to move your life forward. The important part of all of this is that it is going after these longer term goals.
When I talk about your investment mindset, I am talking about you wanting to invest now in your own personal and professional development so that you can see growing returns for the rest of your life. That's what real return on investment looks like, not instant gains that will be erased with the next change in fashion or idea.
Know Your Business
Warren Buffett is known as one of the greatest investors of all time. His focus has been almost entirely on businesses he understands. This has caused him to miss out on some major players in the investment world (sacrifice), but it has also allowed him to see consistent compounding growth, leading him to be one of the wealthiest people in the world.
So what is your business? I'm not talking about your day job, though that can be tied to this. I'm talking about your purpose. What is the thing that you are trying to see done in the world, the thing that is so valuable to you that you would dedicate your life to pursuing?
Your purpose helps you understand the trajectory of your personal business. If you want to invest in yourself and maintain an investment mindset, you need to know what you want your investment to turn into. You need to own your purpose and set it in front of you. Then, you can start the work of investing in your own life, leading you to reach your destination.
Own Your Business
A common aspect to any investment mindset is the idea of owning your businesses. If you believe your investment is worth its end result, that it is worth investing in (which it is by the way), then you need to be the owner of your own life. This shows that you value the things you are committing to and want to see it grow.
You need to see where you have some weaknesses and where there are places that need to change or grow. This will help you see what areas of your life have the potential to hold you back and keep you from developing.
You also need to see where you are strong, the places where you can see your greatest work accomplished. Tap into your strengths and see where you can be the very best. When you focus on these strengths, on your places of optimal performance, you can use these skills to account for your weaknesses as well as move you forward faster.
The last piece of the investment mindset is for you to get some partners. You can find these wherever you look. The important part is choosing the right partners.
Who are the most (positively) influential people in your life? Who are the people you would like to learn from? You have a variety of options for partners. Just like any good business owner, you want to find people who can add value to your business. If you want to harness your investment mindset, you need to look for the ways that you can use other's wisdom and expertise to add value to your life.
These partners can create new opportunities for growth, spot weaknesses you are blind to, or even challenge you beyond what you thought possible. A good partner will add value but increasing the speed at which your investment in yourself compounds. Hire a coach to work with you. Look for mentors in the places you want to grow. Utilize a spouse, best friend, or a family member you trust.
The reason a partner (or partners) is important for this investment mindset is because a good business is willing to add value to itself in more than one way. Instead of just going through your own process or even just reading posts on this site, your ability to join with a community will bring accelerated growth and allow for a new branch of your investment mindset to form.
Start Building Your Personal Investment Mindset Today
We all can benefit from an investment mindset, both in our financial lives and in our personal. Start working on your mindset today. Pay attention for where this is difficult and seek understanding. Don't give up too quickly and be patient as your investment builds over time. Use support to get you where you need to go and own your own self through it all. Be sure to leave your comments on how your own investment mindset has helped you!