Why must investors think like politicians

It won’t be wrong to say that American society takes a keen interest in politics. We are a passionate lot when it comes to politics and the party that we support. We vehemently participate in debates with our peers and stand up to our beliefs. However, did you know that you can also take key investment lessons from politics and politicians?

We all know that it takes astute skills to become a politician. When these skills are applied in making investment decisions, it can result in great profits.

 

Good decision-making capabilities

Politicians often encounter tough situations at work and have to make hard decisions. They cannot make these decisions unless they know the impact that their choices may create. They have a flair of assessing the outcomes of their actions and go with the need for/ the hour. You can apply the same principles in your investment choices. For instance, budgeting can seem difficult if you are new to it and are used to living a particular lifestyle. However, it becomes easier to commit to your planned budget once you realize the benefits that it may deliver in the long term.

 

Accountability

When their decisions and outcomes go haywire, politicians take accountability and move on. They focus more on mitigating what went wrong and take corrective actions. You can adopt a similar attitude when you are in credit card debt. More often than not, you will find yourself in this situation when you spend more than you can afford. The only way forward is to accept that you made the wrong decisions and make a plan to come out of this debt. You may have to take some immediate steps like curbing your expenses and avoid more credit to live a debt-free life.

 

Be prepared for unlikely events

The presidential elections of 2016 threw a surprise when Trump won the polls. Needless to say, most politicians were not expecting this rather unusual result. Trump, known for his economic expertise, was chosen for his radical ideas and policy suggestions. Investors had to rethink their investment choices in the stock market. Trump advocated lesser imports, and thus ingenious domestic companies saw a rise in their share prices. Stock market investors should always be prepared for extraordinary situations. The market is dominated by both external and internal events. Investors must always have a plan B to cushion themselves from losses. Another option is to invest in mutual funds. They are managed by experts who have an in-depth knowledge of the market.

 

Prepare solid plans

Every leader who runs for a significant office has strong beliefs. She prepares a list of policy changes that define how her term is going to be. Smart investors also chart out a financial plan for their future needs. The best is to list down your immediate and future financial goals. For instance, your five-year goal could be to buy a house. Retirement should always be a priority for your long term goals. Once you figure these goals, start accumulating money for them. Also, saving alone is not going to create wealth. You will have to consider investment options to account for your best returns.

 

Negotiation and persuasion

One of the most crucial abilities of a successful politician is her ability to negotiate with her colleagues. At times, politicians also have to negotiate with their international counterparts for favorable outcomes. You will be surprised at how negotiations can get you desirable results in your own life. For instance, you can negotiate with lenders for better interest rates when you want to avail of loans. More lenders would agree for lower rates if you have a positive credit score. Negotiation can save you a few thousand in certain cases like a home loan. Similarly, you can negotiate for a lower interest rate if you are unable to repay your loans.