3 Important Investing Mindsets


3 Important Investing Mindsets

Have you ever wondered why highly intelligent people always lose money in the stock market? How is it possible that people with PhDs and CFAs, the very people that you aspire to become are unable to make consistent profits in the stock market? Yet, have you heard of stories of ordinary people achieving financial freedom from the stock market?  I spent the last 7 years thinking about the difference between their investing mindsets.

As a financial services consultant, many people contact me to consult me to help them achieve their financial goals. After talking to many of them, I notice that there are two major investing mindset groups. I soon realised the ones that are more consistent in achieving their financial goals have 3 important investing mindsets that set them apart from the others. Surprisingly, this group of people might not have their PhDs nor hold high senior positions in MNCs. You might be surrounded by these ordinary people who are able to achieve extraordinary results from the stock market. The secret is the investing mindset.

 

  • Education

 

They strongly believe in further education. Your mind is like a cup and whatever you pour into in it determines the beverage you have. I noticed there are people who want to invest in the stock market but they refuse to study about the stock market. They go in with an empty cup and when their lose money, they don’t understand why they lose money and blame the stock market for being such an ass. They then start to fill their cup with information on why investing in the stock market is risky and soon convince themselves to not invest anymore.

On the other hand, the more successful group of investors educate themselves about the stock market before even investing. These people fill their cup with knowledge, strategies and experience from people who have done well consistently in the stock market. They understand why and what to invest in and blame only themselves if they don’t prepare enough. They fill their cup consistently and pour away those that do not fit their risk profile or are inconsistent. They do so by attending courses and reading books so that their cup has contents which remain updated and valid. One of Warren Buffett best quotes is “The best education you can get is investing in yourself, and that doesn’t mean college or university.”  If you want to be successful in investing, you have to first invest in yourself to be educated in investing.

 

  • Consistency 

One of the largest brands in the world taught many of us a very important lesson. To have results, we need to wing it and just do it. Do you know friends who used to be really fit in the past but are now obese? Some of my friends used to have 6 packs and could sprint without panting. I used to look up to these people. Now, when we meet, they are twice the man they once were (pun intended). What has happened? I notice the excuses they give are largely the same. They have no time, they are busy or they have other things to do. For them, their health have deteriorated and they are living on pills and coffee most of the time.

Now, investing is the same. Some people took the effort to get educated and managed to get passive income from the stock market using strategies they have learnt. They boast about it for a while. Years later when you contact them again, some of them may not be investing anymore. It might be because investing is boring, they don’t have time or any other reasons. For successful investors, they don’t just do it once, they do it again and again and again until they achieve what they want. One of my favourite Singaporean quotes depicts this nicely.  “First time tyco, Second time pro” means the first time you could be lucky, the second time, you are the real deal.

 

  • Community 

Successful people don’t do things alone. They have a group of people who they can consult and get advice from. Motivational Speaker Jim Rohn famously said “you are the average of the 5 people we spend the most time with”. Let’s pause a while here and do a simple experiment.

  1. Write down the names of the 5 people you hang out with
  2. Estimate their annual income of your 5 friends
  3. Add up their annual incomes and divide it by 5

Do you notice that it is strangely close to the income you are getting?

Now let’s do another simple experiment.

  1. Write down the names of the 5 people you hang out with
  2. Estimate their passive income of your 5 friends
  3. Add up their passive income and divide it by 5

Do you notice that it might be the passive income you are getting or not getting?

I’m not asking you to change your friends. What I’m suggesting is that if you want to get fitter, you have to make friends with people who are fit. If you want to become a good business man, you need to make friends who are good business men. If you want to achieve financial freedom, you need to make friends with those who have already achieved financial freedom.

Wherever you are in your journey with money, I suggest you start with the right mindset of investing. Teach yourself. Seek Mentors. Read and apply what you study. Of course, be happy.

Here is a bonus video for those who wish to start filling their cups.

I appreciate your comments and suggestions below regarding this article for further enhancements.

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