The reality of investing your hard earned money
One thing I’ve learnt over almost three decades of trading the stock market, is that when individuals invest their hard-earned money, they never expect to lose.
On an intellectual level they know it is possible to lose money, they just don’t think it will happen to them.
This false reality unfortunately means investors tend to make emotional decisions when investing their money, which leads to mistakes when managing their portfolio.
When you invest with a mindset of not losing, you expose yourself to higher risks, which in turn results in one of two issues. The first is you achieve poor portfolio returns. Secondly, it increases your stress levels, as you watch your stocks fall in price and your portfolio devalue. Indeed, watching your investments fall without taking the necessary action to exit is the difference between a comfortable, early retirement and working until pension age or, in some cases, longer.
Over the years, I have reviewed many portfolios and the one thing that remains constant is that the majority of investors are ignorant about the reality of what investing their hard-earned money really means. A motto that I continually drum into my clients when it comes to profitable investing is what you do not lose determines how much you make.
While this is overly simplistic, once you learn the rules about how to find good investments and you are able to manage them with the knowledge and confidence of knowing when to exit, your risk and stress levels will decrease and you will profit more.
While it is inevitable that some stocks will fall in value after you purchase them, the reality is that to achieve better than average returns with your portfolio, you need to concentrate on assets that are rising in value and increasing your wealth, and sell assets that are falling away.
Dale Gillham is Chief Analyst at Wealth Within and international bestselling author of How to Beat the Managed Funds by 20%. He is also the author of Accelerate Your Wealth—It’s Your Money, Your Choice, which is available in bookstores and online at www.wealthwithin.com.au
Short-term positions in small, early stage ASX companies,
with high potential and near term price catalysts.
Focusing on resource exploration, early-stage tech, and biotech.
Exceptional opportunities across a broad range of
early-stage growth sectors with strong management.
Seeking 1,000% plus returns across medium to long-term holds.
Longer-term positions in a variety of sectors.
Seeking strong management where traction is established and have entered into a growth phase.
S3 Consortium Pty Ltd (CAR No.433913) is a corporate authorised representative of LeMessurier Securities Pty Ltd (AFSL No. 296877). The information contained in this article is general information only. Any advice is general advice only. Neither your personal objectives, financial situation nor needs have been taken into consideration. Accordingly you should consider how appropriate the advice (if any) is to those objectives, financial situation and needs, before acting on the advice.
Conflict of Interest Notice
S3 Consortium Pty Ltd does and seeks to do business with companies featured in its articles. As a result, investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of this article. Investors should consider this article as only a single factor in making any investment decision. The publishers of this article also wish to disclose that they may hold this stock in their portfolios and that any decision to purchase this stock should be done so after the purchaser has made their own inquires as to the validity of any information in this article.
The information contained in this article is current at the finalised date. The information contained in this article is based on sources reasonably considered to be reliable by S3 Consortium Pty Ltd, and available in the public domain. No “insider information” is ever sourced, disclosed or used by S3 Consortium.