I’ve studied marketing, relationships, self-development, language, history, leadership, investing and time management and I have come to an incredible conclusion – that it’s pretty much all the same.
What I’ve found is that the same principles to being a better salesperson will work in being a better parent. That if you learn how to negotiate with a three-year old that you’ll be able to handle the boardroom.
Regardless of which situation we are in, much of what we decide to do is based upon emotion.
People like to think that business or investing isn’t emotional but if your business has ever been on the verge of collapsing or you’ve watched your life-savings drop 50% it’s emotion that rules the day, not logic.
With all that’s going on in the world today I am getting asked more and more financial questions because for the last few years I have made the study of wealth a priority in my life.
I divided my time up between stocks, real estate and precious metals.
And thankfully I have been able to grow my personal wealth by 100% in the last 4 years. This in spite of my stock portfolio dropping 50% recently.
Now I’m still a ways away from being a millionaire, but, I have succeeded in a time when others have struggled mightily.
So today I thought I’d share with you the 7 reasons that I believe people fail at investing.
- Psychology – Nearly everyone I know wants to make a quick buck. Then when the stock drops they can buy back in later. To me that’s like gambling in Vegas – trying to get in and out of the stock market at the right time is next to impossible. Emotions take over. Logic goes out the window. The rules you set, you break due to fear on the downside and greed on the upside. Too many people buy simply to make a profit, instead buy because the company has a solid foundation, good management,a bright future and is undervalued.
- Lack of Education – So you want to be rich and you figure the best way would be investing. OK, start by picking up a book or reading a newspaper (not the comics). Even better, take a seminar. Educate yourself or you’ll find yourself dead in the water. Find the people that know a thing or two about what you want to know and then study what they do. Don’t just do what they do. Develop your own theory on investing.
- Vision – See the future. You can’t think about today or tomorrow but 5, 10 years out. That’s where you’ll make the big money. People didn’t make a ton of money buying Microsoft when it went public and then selling a year later. They made money IF they held it. Warren Buffet didn’t become one of the richest men in the world by buying and selling stocks continuously but rather by holding on to good stock. Good advice.
- Lack of Experience – It’s one thing to sit on the sidelines and watch what people are doing and criticize but it’s another to be in the game. Our perspective changes, our emotions change, the pressure ramps up, the fear is palpable. Get in the game and learn to win, don’t just pretend play. And don’t forget, losing is part of winning. Even Michael Jordan lost games, you will, too.
- Lack of Understanding a Good Deal – If your favorite store were going out of business and was having a clearance sale, you’d be like, “Woohoo!!” But when it comes to stock market crashes, we panic. Why? it’s on sale. Rather than panic, buy more.
- Greed – This is a tough one. It’s hard not to let greed take over when you see your investments jump in value. You get excited. Some people sell too early and regret it later. Others hold on too long and also regret it. There is no easy answer for this one but I believe the best advice is to sell when you are happy with it and never look back.
- Fear of Investing – Just the other day I talked to a guy who said he’d never invest because he had a friend whose father lost everything and the kitchen sink in stocks. His family was burdened with debt for years, so his solution was to never invest. Just because one person’s decisions led to failure doesn’t mean yours have to. Instead wouldn’t it be better to find out what he had done and figured out where he went wrong then NOT DO THAT. Not investing means that you believe in SAVING. But saving is a loser’s game in today’s world. Inflation taxes a big bite out of my money. Savings here in Japan run at .01% – can you believe that? In NY some banks have now started charging people to keep their money? So saving isn’t winning.
And 8, which is my #1 key to investing is NEVER, EVER, risk more money than you are willing to lose.
Some people do hit it big with one big investment. But I personally don’t know anyone. The people who have done well at investing (in stocks, real estate or precious metals) all tread carefully. They might know their stuff, but they are also smart enough to know that even they could lose.
Now, here’s the crazy thing. Go back and reread these suggestions as if they were to apply to building a business or being a better parent. You’ll have to use your imagination somewhat but do you see how similar life really is?!
One final note, I would like to remind people that I am in no way a financial adviser or offering financial advice.
I am merely sharing ideas with you that I have come across in my studies and that I have found interesting and valuable in my own development.
There are a million ways to make money, I encourage you to go in search of one and once you find it, stick at it.
Adrian Shepherd