The 5 Key Principles Behind the Mindset of an Investor

What does it mean to be an investor? Investors are typically defined as people who commit capital with the expectation of financial returns. Adam Smith defined capital as "That part of a man's stock which he expects to afford him revenue". Therefore, we all are investors in some way. Whether or not you actually take capital and make an investment into a company or you invest your time, goods or services, you still have an expectation of a return on those assets or effort.

If this is the case and we are all investors, should we all have an investor mindset? This does not include those things which we do that are a passion project or charitable in nature. Rather, it is limited to any efforts made in the area of work or career which has a financial aspect to it.

When it comes to the financial aspects of life should we all make sure that we are making prudent investment decisions? If the goal is to create a financial return the effort and the choices we make daily should be analyzed from the mindset of an investor.

The mindset of an investor is based on a few key principles:

  1. Solve a Problem - Investors seek opportunities that create value; when value is created there is an opportunity for our return. In order to create value a product or service must solve a problem. If you are making a product or service are you solving a problem? If you are working in an organization does that organization’s product or service solve a problem?
  2. Be the Linchpin - Seth Godin Made the term Linchpin popular in a recent book. The question is, are you indispensable to your team? Do you create value for those around you?Are you able to be resourceful and grow both internally and impact growth around you? Are you the Linchpin?
  3. Uniqueness - What makes your product unique, novel or different? Are you able to secure intellectual property rights (copyright, trademark or patent) for your product or service? What is going to set you apart from your competition?
  4. Customer Focus - Customers who will pay for what you offer at a price higher than it cost you to make or deliver - So often we want to help others out or connect with others at some personal level and this is important when growing a brand. However, when seeking to create a return, it is important to spend your working time to make money from people and clients who have the budgets to be customers, and spend your free time giving back like investors do when they mentor.
  5. Emotionless - Investments have one outcome which is to produce a return. Therefore, anything else impeding that progress needs to be altered or modified. As an investor there's little room for mistakes or excuses in the processes and systems of growth. Realistically evaluate investment of money, time and resources, leaving emotion out of the decision making process.

While some of these principles may seem harsh or counter-intuitive to a collaborative environment and empowering culture, they are simply foundation beliefs upon which investors make investments. To continue to invest in yourself, your company or attract investors it is critical that you understand these foundation beliefs.

Each day when we wake up we each have the same 86400 seconds to invest and therefore each day we each had the same opportunity to create wealth for our lives. The question is how are you going to treat all those seconds? Are you going to give them away or invest them and create a return?

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