Let’s assume there are funds waiting to be invested.
In what form do you keep them?
Investors have the luxury of time. Traders don’t.
I’m really telling you, an investor’s funds need not be kept in free form.
Traders need to pounce, not investors.
If you don’t need to pounce, don’t keep your funds in free form.
Keep them bound. Semi-bound. Let’s call it stressed. Keep them stressed. Stress that is under your control.
What are we talking about?
Also, why are we talking about whatever we are talking about?
Free funds are open to whims and fancies.
Yours. Your bankers’. Anyone’s, who has an eye on the funds.
Plush with free funds, you take liberties. Your defences are down. You are liable to make mistakes, perhaps big ones.
Bound funds, on the other hand, are subject to activation barriers before release.
You think twice before releasing them, or perhaps thrice, if the locking is tight. You win precious time. During the extra time, you can well scrap an investment with a faulty premise, or you can discover hidden agendas or angles which cause you not to follow through. You get saved because of controlled stress.
Furthermore, bound funds don’t reflect on your banker’s system as funds waiting to be invested. He or she won’t bother you or incite you to make a mistake. You’ve knocked him or her out of the equation. Bravo!
Controlled stress can be of different degrees. When funds are irreversibly locked-in, then we cannot talk of control anymore. Anything below that is under our control with varying levels of effectivity. The stronger the (reversible) lock-in, the harder you’ll think about the new investment, because the activation barrier for making funds free again to invest is large.
Let’s not get too carried away. We can just make simple fixed deposits. These are completely within our control. You can break them with a letter to the bank manager. The activation barrier to free them is relatively small. However, you do think twice before freeing them. The’ve disappeared from your banker’s horizon. They’ve also disappeared from any online fraudster’s horizon, who was perhaps looking to clean you out.
Also, actually, you don’t really need to break these fixed deposits to get into a new investment, since breaking goes with a small interest-penalty. If you’ve got fresh funds coming in at a later date, but wish to invest now, you can borrow against a fixed deposit. This will again make you stop and think, because borrowing comes with a cost, i.e. interest. You will only get into the fresh investment if you really, really have to / want to. You will discard any half-baked investment idea. It’s still worth it, despite the interest. You might find this a bit crazy, bit I like to do it like this. For me, the biggest win here is that I am not breaking a former structure. Add to this the extra safety. Plus the extra thinking-time to ward-off bad investments. Add everything up, and you might also think that the borrowing cost is peanuts when compared to the benefits. Don’t forget, since you’ve got fresh funds coming in soon, you’ll soon be releasing the fixed deposits you are borrowing against from their overdraft mode. This is a meta-game strategy.
Yeah, keep investible funds in fixed deposits. It is really as simple as that.
The best things in life are really very simple.
Complication and sophistication are facades used by humans to hide their mediocrity.
A successful person does not need to hide his or her simplicity.
Simplicity is one of the biggest precursors to mega-success.