In my last article I discussed the concept of prioritization and the relationship it has with resource allocation. In this post, I'll talk about how this concept can be applied to investing.
Before jumping into the main topic of this post, let's do a quick recap of what we learned with the last one:
- Urgency, importance and impact are prioritization criteria
- Prioritization is allocating resources according to the criteria above
- Resources are finite, which is why we need to prioritize
Prioritization applied to investing
Investing is probably one of the clearest examples of resource allocation. When you invest in something you are allocating money, property or, ultimately, your time into that thing with the hope that it will pay off in the future (at least that's what you should be doing!).
There are too many investment opportunities out there and even if you are very rich, it's unlikely that you have the assets, the time or the attention span required to be everywhere so, eventually, you will need to prioritize your resources to the projects you believe in the most.
Let's take a look at Hive for example. There are a lot of different projects to choose from. You have blockchain games such as Splinterlands, Rising Star and dCity, to name a few, there are passive income opportunities like Utopis, LBI, Index and all sorts of liquidity pools, engagement projects and many other things that I probably never heard about.
This enormous amount of opportunities is a clear sign that Hive is a thriving community with a lot of potential but it can be a bit of a problem for investors who may feel tempted to FOMO into everything they see in front of them, finding themselves too diluted across the board and being unable to keep up with the news and updates of their portfolio.
Of course, there is a chance that everything on Hive explodes to insane value so it doesn't matter all that much but, in my opinion, we're more likely to build wealth by choosing a project we believe in the most and allocating the resources we think are necessary to reach our goals.
Setting goals
So, does it mean I must pick a single project and allocate all my resources there? Not necessarily.
You have probably heard about SMART goals before. If you haven't, look it up but for the purposes of this article is enough to know that the T stands for time-bound. That means you should define set a deadline for your goals.
What I mean is while "I want to be a Hive whale" is not the worst objective in the world, something along the lines of "I want to double my Hive stake by December", or "I want to reach 5k HP in the next 6 months" are much better goals because you can actually track your progress and adjust accordingly.
My prioritization approach
What I do is very similar to the Project A and Project B scenarios from the last article. I pick a project I like and set it as my number 1 priority. Then, I set a SMART goal for it and I design an allocation plan that will get me to the position I want to be in, within the timeframe I defined for my goal.
Then, every week I look at what resources I have at my disposal, I allocate all the resources that my priority 1 project demands and, if there's anything left, I can either find a number 2 priority or just use it as "Play money" to explore new opportunities. But I make sure that my main goal is not impacted by this because I prioritized my resources and allocated them accordingly.
It may seem obvious to most but it's amazing how some people don't understand the real concept of prioritization and end up having very bad returns on their investments.
One final note is that plans are made to be followed, but they are not set in stone. If you notice that your plan is not working for whatever reason, do review adjust it.
Final thoughts
Prioritizing is fundamental to building wealth because it allows you to focus your resources on the things that really matter to you.
A simple and yet effective prioritization framework is:
- Pick one opportunity to be your number 1 priority
- Set a SMART goal around it
- Periodically allocate 100% of the resources you need to achieve that goal (within the defined timeframe)
- If you have resources to spare, repeat the steps above for one or more opportunities
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This really works and truth is, being specific in your goals makes it easier to achieve them.
I too want to be a hive whale but yet it is not realistic. Build little by little then the main goal becomes clearer. As they always say: little drops of water makes an ocean.
@tokenizedsociety thank you for this nice piece of article.
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Thanks for the comment! I'm glad you liked it!
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Never knew how much I needed to learn about investment goals and how to go about them until I read this post. I love the SMART acronym, thanks a lot for this piece
Thanks for the comment!
One of the greatest things about Hive, in my opinion, is how much we learn from each other! I'm glad you enjoyed the post! It means a lot to me!
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I love Hive so much, because on hive their are so many ways of building wealth, I never held about the smart goal thingy before but I know it now thanks to you, very informative post bro.
Thank you! It means a lot to me! I'm glad I could help!
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You are welcome bro, keep up the good work👍
Investing is very important because is going to help you to increase your fund.
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Definitely! It can make a huge difference down the road!
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K
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In all we do, there should always be a scale of preference for better results to be achieved. In investments, the importance of prioritization cannot be over-estimated. It helps one to maximize his capital more.
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Well said! I also believe in that very much!
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Great;
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Your content has been voted as a part of Encouragement program. Keep up the good work!
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