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Should I? Shouldn’t I? Invest
If you're asking yourself:
“Are interest rates high enough on these development loans?”
“Are bad debts low enough on these personal loans?”
“Is pawnbroking P2P lending too high a risk?”
“Is the loan to value low enough on these buy-to-let mortgages?”
“Do these guys really have enough experience to select the best borrowers?”
Don't Do It!
If you can't confidently say I am sure about this, the answer is No – I'm not handing over my cash. That applies to all investments.
Otherwise you'll regret it, in the same way you'll regret buying a workstation for your child for £700 just because the dealer said the bargain price ends on Friday because the real price (so the dealer says) is £1,000 so you better get a move on.
Trust me, I know.
The best investors reject all investments that don't give them what they consider to be a large margin of safety – an obvious Yes decision.
But most people find this difficult, because it means for all your effort you still say No most of the time. You don't want all that research time to have been “wasted”. (It wasn't. You must have learned something.)
The same is true in many areas of life. Like when you interviewed that person and justified hiring him to build your garage, but later you realise you should have listened to those niggling doubts.
Or when your new dentist tells you out of the blue that you need your wisdom teeth pulled out and another one later says that it was probably unnecessary. Why didn't you get that second opinion you wanted?
It's all those feelings you have that say I'm not actually sure – and on which we all too often just go ahead anyway.
Importantly, it is you who has to be able to say this confidently: “I am absolutely sure about this”. It is not: “This confident sounding expert is absolutely sure about this and his enthusiasm is persuading me.”
You will still make mistakes, but you'll make far fewer rash ones. Bide your time until you find opportunities you're confident in.
“Do I have any niggling doubts? Yes. Then ‘No thanks!' to this investment.”