How To Determine If You Are An Investor Or A Consumer
A consumer is one that basically only consumes (goods, services etc.) and spends. An investor, on the other hand, is somebody who spends money for the purpose of making more money, ownership and is known to put his or her capital to work.
In the business of investing, there is a truth that your mindset governs what you do and what you ultimately make out of it. One of such mindset lies in determining if you are an investor or if you are a consumer.
A consumer is one that basically only consumes (goods, services etc.) and spends. An investor, on the other hand, is somebody who spends money for the purpose of making more money, ownership and is known to put his or her capital to work.
If they still sound like two different things, the following differences will broaden your understanding in just a few minutes:
Cost Versus Return Mentality
When a consumer is met with an investment cost, he sees only the cost and disregards whatever other potential lies. The investor, on the other hand, sees beyond the cost of the investment and determines if the return is worth the investment in the first place.
Good investment thinking lies in comparing the cost and the outcome to make a buying decision. When consumers say “can I really afford to spend on this investment?” investors say they cannot afford to not invest.
What You Do With Extra Income
When you make extra income, what do you do with it? The consumer spends it on things that have no financial return whatsoever. However, you are an investor, your first inclination is to spend on something that will yield additional income.
What They Spend On
A consumer generally just buys. Where there’s a sale on an item, he or she buys. Whenever the consumer is moved to make a purchase, he simply spends without so much care about the repercussions of such.
An investor, on the other hand, sees his or her investments as vehicles towards a goal. As such, he or she does not haphazardly invest without proper analysis and research.
Another part of the consumer versus investor spending habit is that while an investor spends now to enjoy the fruit of his labour, investors opt for future gains.
This is the difference between instant gratification and delayed gratification. So instead of buying a house because they deserve it, they invest so that profits from such investments will get them all the luxury they need in the future.
The Success Spirit
While the consumer is busy seeing all the reasons why the investment will not work, the investor is seeking out all the different ways and methods by which it will work.
As consumers are busy trying to guarantee a certain result, investors put in the effort to determine strategies by which an investment vehicle of their choice will trump market dynamics and succeed.
As simple as this analogy is, it will help you determine if you are indeed an investor or just a consumer. What is clear, however, is that thinking like a consumer will not allow you to take the required actions for investment success, neither will it help you achieve the objective you want.
Think like an investor and you will build income like an investor in no time.
Written by Lawretta Egba.