The Money Blog

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A balanced approach to investing

Jun 23, 2022

There is a saying that can help you tell the difference between pessimist and optimist investors, it goes: “A pessimist is an optimist with experience.”

Investing can be a powerful generator of wealth but it also carries with it great risk.

For example, in real estate investing, you need to consider cost overruns, vacancies, interest rates, and the broader forces influencing the economy.

Equities hold even more uncertainty when you are one retail investor amongst millions, and while a meticulous proforma can improve decision-making, there will never be a line on the spreadsheet saying jump!

An optimistic investor is usually quick to act and doesn’t let setbacks hold them back.

A pessimistic investor will be overly cautious and will expect downward swings from doing the research.

An optimist is energized by positivity, and open to fresh opportunities.

A pessimist is better prepared to deal with risks.

Successful investors rely on a blend of both traits, also known as realistic optimism.

The next investment opportunity comes your way, take time to internalize the more nuanced elements of your reasoning. Ask yourself whether you are drowning in fear, or floating on a cloud of wishful thinking?

Accept the fact that no investment is zero-risk and that the reward will come to investors who exude the positivity and quick action of the optimist, which rests on the well-informed strategies of the pessimist.