The Good Life | 5 Timeless Investment Principles for Decision-Making

We live in a world of lenders and borrowers. We are all in debt or indebted. We are savers or spenders. We are hoarders or squanderers. There always seems to be a sense of imbalance in our dealings with our world. This is when the market–and the financial markets in particular–play an invigorating role in creating a system that will allow those with surplus capital to finance people who experience deficits in capital.

Financial markets are largely divided into debt and equity markets. Debt is a contractual agreement where the borrower agrees to pay the lender a fixed (or floating) sum at regular intervals until a specified date. Equities, on the other hand, have no maturity date. People who hold equity, obtain their income from either dividends or any capital gains that may arise. Equity also allows for an ownership stake in the company, which can either be long or short-term in nature.

For a company looking to acquire funding, both debt and equity are two ways with which a business can finance its operations. For an investor, investing in debt and/or securities can be a viable option for getting their money to work for them.

But before we plunge into the world of investing as an income-generating activity, it is imperative to understand the basic fundamentals behind the decision-making process.

Losses are not entirely avoidable, but what we can do is minimise our probabilities of making them. Each investor has his or her own capacity for risk. Risk and return have an inverse relationship–the greater the risk we choose to take on, the greater the potential for both gains and losses. Diversification is often suggested as a strategy to cushion oneself against these potential losses. But if you ask me, it actually dilutes the investment strategy that a particular investor has chosen–thereby reducing the risk of loss, but also reducing the potential for profit.

There is a lot of hype and hoo-ha in the world of investing. All that glitters is most certainly not gold. This is why so many end up with the erroneous notion that investing is a form of gambling. Yes, an investment of any sort is a risk; but if it turns out feeling like a gamble, know that there was something in your strategic decision-making that was a little off.

So what we need to do is reassess the criteria for decision-making, as opposed to walking away from investing all together. Much like baking a cake, there are 5 ingredients that must come together to make a sound investment decision. These are:

  1. Mindset
  2. Knowledge
  3. Time
  4. Capital
  5. Adaptability


Investing is more about mindset than about math. Studying the math is no different to reading a history book or attempting to forecast the weather for the future. First of all, I am not suggesting that you not study the math. You definitely should. The viability of a company for investment purposes often hinges on earnings-per-share (EPS) and net cash generated through operating activities. But there are many other criteria that you can draw upon for your decision-making process.

If you’re investing in a startup, there is often no historical data to work with. Does that mean you decide not to invest altogether? Imagine if you were one of the very first investors in the big 4 tech companies. You would have made a killing.

The mindset I am suggesting that investors employ is one of flexibility. There is no universal yardstick with which to assess which investment is a good one. There is no guru who can guarantee you a foolproof decision. Which is what brings me to the second ingredient.


If you don’t like studying, then you better start. Investing is simply not for people who are not hardworking. Yes, ideally we all want our money to work for us for minimal effort on our part; but if you don’t take the time to continuously study what is going on–in the market, in the company, in the economy–you will find yourself making very poor decisions.

A good investment today can become a terrible investment tomorrow because of changes in market conditions. COVID-19 has put many consistently profitable businesses in the red. The pandemic has also created exponential wealth for numerous other companies out of the blue.

You can only be at the right place at the right time if you know how to make your way there in time for the bus that is embarking towards profitability. If you choose to stick to what you know and the tried-and-tested way of doing things, you will find yourself arriving at the bus station long after the bus has departed for its destination–without you onboard. Most of our regrets are rooted in all the things we didn’t do, as opposed to all the things we did.

The only way to gain knowledge is to know that making mistakes is a part of the game. There’s no need to beat yourself up or chase after losses. All you need to know is that you screwed up because of X and therefore you know never to do X ever again. On the flip side, if you know that you succeeded because of Y repeatedly, then you know that Y works.

But will it work till the end of time? Probably not.

Keep your eyes open and your ear on the ground. Oh, and remember to soar above like a hawk from time to time to get some much-needed perspective as well.


If you’re in it for a short-term fling, you are a trader or a gambler–not an investor. Plain and simple. Investing is either a marriage or a long-term commitment. You shouldn’t run away or pull out at the first sight of a gain or a loss. You simply have to stick it out till the investment begins yielding returns.

Short-term and long-term investments are differentiated by their duration. In accounting terms, anything that lasts under a year is classified as ‘current’, where else any decision that lasts for more than a year is considered long-term.

A tech giant like Amazon took 7 years to turn a profit. If you based your decision-making on its first few years of performance, you would have lost out on the exponential future profits that would have ensued in future. If you have a hard-time with making commitments, it’s your time horizon that you need to adjust–not the investment decision you need to make.

If trading–the mindset to buy with the intention to sell–is why you’ve made a particular decision, then know that you are a trader… or perhaps even a gambler. Allow me to use a simple analogy. If you want to sell the fruit from a tree to someone else, you are a trader. If, on the other hand, you choose to buy the branch of the tree that generates the fruit, then you are an investor. You have every intention of keeping (and perhaps even reinvesting) the fruits of that particular branch.

If you don’t invest your time, you simply won’t make very much money that replenishes and regenerates itself. End of story.


One of the common complaints I hear from all startup founders is not enough money. The factors they always cite: a lack of seed money, low sales figures and sky high expenses. Before we tackle the external–seed money and sales; we should always tackle the internal–the sky high expenses. Quite simply put, are you spending wisely and within your means or are you allowing yourself to indulge in unnecessary purchases? If you’re terrible at managing your finances, hire an accountant who will tell you NO.

Similarly, choose your advisors wisely. If you’ve been throwing good money after bad money to stay afloat to support your poor decisions, you’ll be in the red before you know it. Coming back to that tree analogy. If you’re purchasing fertiliser, water and equipment so that the tree can expand and grow further; then that’s great. If you’re buying Christmas lights, a jewel encrusted star and all those other frivolous things that have no bearing on your profits, then you are indulging in emotional spending.

Most of us like sparkly and shiny things. Most of us realise at some point that these things are ornamental, not functional. Don’t get caught up in trying to make your tree look better than your neighbours. It’s not what it looks like, but what it can provide that truly matters.


You did everything right and now, unbeknownst to you, some insects have decided that your fruits are tasty and would like to eat them. Oh dear me. What a calamity. Let’s have a drama to feel sorry for ourselves.

Or perhaps, we simply need to expand our knowledge even further. What can these insects do that the fruits can’t? Are they bees? Can they make honey? Oh, what a marvellous idea! I’ll invest in the bees and the branches.

It is all a matter of perspective.

Changes will inevitably occur. Some of these changes will be big and transformational, others will be small and manageable. Some of these changes will prove to be a nuisance; and others will serve as a blessing in disguise.

It’s hard to know which category the change falls into till time has revealed the full extent of the consequences of your decisions. In either case, we need to be adaptable, open and willing to change with the circumstances. We don’t need to cut down the whole tree because of a few bad apples or pests–we can simply get rid of or eradicate the ones that are not bearing fruit anymore so that regrowth is possible.

If we don’t let things go, we can’t let things in.

If we look at every change as somehow going against the plan we had in mind, we won’t be able to see the unforeseeable blessings that have come our way.

The Good Life

At the end of the day, investing is a game. Don’t play with your life or your future. Investing is a sport. Play to win. But know that from time to time, you will lose. If you make yourself miserable on the way there, then the destination may not be worth it. So remain optimistic and don’t allow yourself to indulge in pessimism.

Open your eyes and your mind and learn–and then continue learning. Allow yourself to change and grow. It’s going to be one hell of a ride.


5 thoughts on “The Good Life | 5 Timeless Investment Principles for Decision-Making

  1. Excellent. I see a master in the making. Oh wait–perhaps the master is simply rediscovering herself. Congratulations, welcome back.


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