Investing Lessons from a Fund Manager

Lesson #1: Maintain focus and have a positive mindset

Over five years ago, I decided to learn how to run long distance and join an actual race. Three months before the actual race itself, I realised that I haven’t been putting much effort into learning and training.

That being said, I was still able to finish the race and learned a valuable lesson while I was at it. Sure, we need physical stamina to run a long distance, but mental stamina and strength is even more important.

No matter how much physical training I did, if I had not remained focused, optimistic and rational throughout the run, I would never have been able to complete the race lap after lap.

The same thing goes for investing. If we don’t have focus and a positive mindset, success will not be within our reach.

Lesson #2: Manage risk

Running carries all sorts of physical risks. Stress fractures, blisters, shin splints and pulled muscles are all common injuries.

While we can’t avoid all risks in running, we can minimise them. In the world of investing, we need to do the same.

Diversifying our portfolio across asset classes, instruments and geographies will minimise the risk. If we focus on only one type of investment, we increase our chances of losing it all.

Lesson #3: Slow and steady

To finish a long distance run, we need to set a healthy pace. By figuring out what pace we need to maintain in order to go the distance, we are likely to cross the finish line and achieve our desired time.

Translating this into the language of investing, if we have the proper long-term mindset and not taking too many risks on any particular trade, we will be able to achieve success.

On the other hand, if we throw everything that we have into any one investment without thinking of the long-term goal then we risk not reaching our investing goals.

To summarize, here are the 3 investing lessons I learned as a fund manager:

  • Lesson #1: Maintain focus and have a positive mindset
  • Lesson #2: Manage risk
  • Lesson #3: Slow and steady

Just as running has provided me with a lot of important lessons both inside and outside the sport that helped me finish the race. You can use the investing lessons listed here to also be able to reach your investing goals.

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