Great independent investors are secure. Here’s one of the things you can do to achieve that status in your investments.

Wednesday: The Independent Investor FROM THE DESK OF MILES EVERSON: How do you describe “security?” Is it the state of being stable in your job, investments, career, or anything else you can think of? While it’s true that each of us have our own definition of security, as an independent professional, this is one of the things that I think we all can agree on: In investing, we should buy the securities that fit us. Keep reading to know more about what we mean by securities in investments and how we can make a wise decision regarding buying these things. CEO, MBO Partners Chairman of the Advisory Board, The I Institute

Great independent investors are secure. Here’s one of the things you can do to achieve that status in your investments. For the past two weeks, we talked about the third investing discipline of the giants, which is… Balance investing to fit you. In those articles, we discussed how we can balance our investments among the three main asset classes: Cash-like savings, bonds, and equities. … but that’s not where the whole process of investing ends. In fact, that’s just the beginning! For today’s article, we’ll be talking about another investing discipline of the giants: Buy the securities that fit you! According to the book, “Investing Disciplines of the Giants,” this discipline calls for choosing the right securities that fit each asset class. First things first. What is Security in investment? Derived from the Latin word “securus,” which means “free from care,” security means something physical, like land, that secured a promise or ownership of some kind. Around 300 years ago, the term “collateral security” was used as the term for ensuring the value of some asset with something else of value. Then, as time passes, certificates or official documents become representations of the promise to pay or some form of ownership. With that, the word “securities” emerged as the term for ownership of bonds, stocks, or more complex financial instruments. At present, there’s a lot of securities to choose from thousands of funds. As a matter of fact, new financial derivatives are seemingly being invented every week! So, as an independent professional who’s planning to buy securities, what should you do? In the words of Warren Buffett, “You don’t need to be an expert in order to achieve satisfactory investment returns. But if you aren’t, you must recognize your limitations.” This means you should keep your securities as simple as your understanding of them. Oftentimes, individual investors and families get into trouble when trying out new, untested securities. “Keep things simple and don’t swing for the fences. When promised with quick profits, respond with a quick ‘no.’” - Warren Buffett You might be wondering, “how much time do I need to spend in choosing securities?” Well, the answer to that question is simple: Devote as little time as possible. That’s also what great investment minds call for us to do. Why is that so? It’s because very few of us are actual professional investors with fully devoted time and sufficient resources to focus on security selection. Additionally, many of us don’t have sufficient time to conduct extensive independent analysis full-time on every possible security. That’s why the giants of investing tell us to just keep it simple. Instead of spending a big chunk of your time in choosing securities, you may just choose the most reasonable, simple ones that generate the return that your average asset class provides. That’s also a part of “thinking smart” about these things. The great economist Paul Samuelson once said, “You shouldn’t spend much time on your investments. That will just tempt you to pull up your plants and see how the roots are doing, and that’s very bad for the roots. It’s also very bad for your sleep.” See? If Samuelson, who’s a great economist, also thinks this way, why shouldn’t you? Instead of bothering yourself about your investments too much, just take the time to relax! If you know you’ve done your investments properly, then don’t worry too much about something going wrong. When you’re confident about what you’ve done, then you can be secure as well. Just take note of the advice of the investing giants when it comes to choosing the securities that fit you: Keep your securities as simple as your understanding of them. By doing so, you’ll be able to handle and manage them properly no matter what happens. Hope you’ve found this week’s insights interesting and helpful. Follow us on LinkedIn. Stay tuned for next Wednesday’s The Independent Investor! Learn more about Active Investing and Passive Investing on next week’s The Independent Investor!