Warren Buffett has these two rules of investing.
- Don’t lose money.
- Don’t forget Rule #1.
That’s the Reader’s Digest version, and there are many nuances. Mr. Buffett also has the amazing knack of identifying undervalued companies that still have some remaining potential as a value investment.
But let’s talk about the mental state required for investing.
Why Do People Invest?
Some people see investing as a short-term process… a sort of get-rich-quick program. But it is investing for the long-term that takes advantage of compounding in order to retire with dignity. The younger you start, the longer your contributions will compound.
So much about investing reminds me of health and fitness. Everyone knows that to lose weight, you need to change your lifestyle. The consensus from all exercise programs boils down to: move more and eat less. Yet, we all continue to search for magic pills, potions, and surgeries for a quick fix… kinda like a get-rich-quick scheme with our money.
Read a Book
The second thing is that most novice investors are dabblers, not doers. As mentioned, there is a tendency to swing for the fences with a get-rich-quick plan without due diligence. When get-rich-quick fails, people say investing is only for the rich and that the stock market is rigged. That’s cognitive dissonance. People have to educate themselves or least find a trusted source of information.
There are many good books about investing. Just Google investing books or type it into YouTube. This is where due diligence comes in. There are a lot of scammy things out there. My favorite book right now is Unshakeable by Tony Robbins. Most people would be surprised at how easy it is to learn the basics of investing. So give it a shot!
As Always…
Thanks for reading! I hope this information provides food for thought. Remember that I am not a certified financial planner, a certified public accountant, a licensed real estate agent, etc. My content is for educational purposes. I am a math educator who happens to have a finance degree. Like they say, never take financial advice from a math teacher! (Do they really say that?)
But you should spend less than you earn, invest the difference, and stay out of debt!
I would so appreciate your sharing my content with anyone you feel could benefit. And if you would like a free exploratory conversation or just want to shoot the breeze about personal finances, call me and leave a message or send a text to 570-731-0425.