Finance Belief# 10: you don’t have to swing for the fences every time. In a similar fashion, most millionaires have stories about the big wins – the apartment building or stock position or business that doubled, tripled or grew exponentially over the years. But they also know that when it comes to investing, such stories are the joyful exception, not the rule. Sure, they sometimes take on oversized positions in ideas which they’ve fully researched and feel strongly about. But they also understand that they don’t always have to take big risks and make big money on every single investment. To use a baseball analogy: they don’t have to swing for the fences every time – singles and doubles are a perfectly good strategy to building your wealth over time. And, because you know that you don’t have to hit a home run with every investment you make, you’re less inclined to swing wildly by taking on too much risk. In an age seemingly full of meme stocks and speculative, get-rich-quick ideas, it’s good advice: a well-diversified portfolio of low-cost, quality investments which you feel comfortable holding for the long term can be just as good at building wealth as the big wins. Belief #11: speculating and investing are not the same game. Guessing which way the market is going to go, betting big on meme stocks, or putting money into the next big cryptocurrency – yup, all of these can make you money. And many millionaires have made a lot of money over their lives by rolling the dice on such opportunities from time to time. But when they do, they know that they are attempting to profit from dramatic, rapid rises in price based on the sentiment or behaviour of other buyers and sellers. That’s called speculating, and it’s a fundamentally different game than putting money behind long-term growth opportunities in undervalued or underappreciated assets. And, if they must speculate, they follow the rules of the game: never go “all in” on any speculation; keep expectations reasonable; and get ready to get out quickly if things don’t work out. If you want to play that game, do what the millionaires do – be honest about what you’re doing and don’t let a bad speculation make a big impact on your finances. Belief #12: the best investment that you can make is the one which you make in yourself. Most millionaires have made dozens, if not hundreds of successful investments over the course of their lives. But nearly all of them would agree that none of these came anywhere close to the investment which they made in themselves. There are, of course, many forms such an investment can take; getting an education is the most obvious one. Starting your own business or side hustle is another. Upgrading professional skills, or learning anything that monetizes your unique talents is yet another. Whatever form it takes, successful investors know that knowledge and skills offer an incredible return: they are assets that can never be seized or go bankrupt, are completely immune to macroeconomic problems such as inflation or rising interest rates and they will likely pay you dividends throughout all of your life. It’s something that a lot of us overlook when we think about investing. But millionaires don’t. Belief #9: there will always be other opportunities. Every veteran investor has a few stories of “the one that got away” – the opportunity which they mistakenly took a pass on, the trend that they didn’t truly appreciate, the investment which they sold way too early, and so on. Millionaires have plenty of these stories, too. But they tend not to dwell on them too much. Instead, they believe that there will be another opportunity down the road, and all they have to do is be patient until it reveals itself. Not only does this perspective prevent them from beating themselves up too much, it also serves as a kind of inoculation against the pressure and fear-of-missing-out thinking that so often defines the hyped-up “hot stocks” and “get in quick” ideas which arise in the investment world. Instead of jumping blindly into ideas because you fear missing out, you bide your time and wait for the best of the best. CSANews | SPRING 2024 | 29
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