Do You Know About The Top 5 Behaviors Of The Rich Nobody Talks About?
Have you heard about the story of a Janitor that had 8million dollars in savings when he died? Yeah, Ronald Read. And he didn’t make that by winning a lottery nor did he inherit it. In fact, he made it all from saving throughout his life and allowing the wonder of compounding to do its work. The lesson here is that your behavior with money is often more important than your intelligence.
To be financially successful, you don’t have to work in Wall Street or have a diploma. You just have to behave soundly. How do you know that behavior? You need to know about the psychology of money.
Hello readers, you are welcome to this blog edition. My name is Antoaneta, and it is my pleasure to be presenting again today. In my platform, there is a lot of content concerning financial freedom and general lifestyle. Therefore, I am urging you to subscribe to my platform. There, you will see other related content like “ Top 15 Ways To Save Money Quicker,” “ Bill Gates Portfolio Changes — Why Is He Selling? What Stocks He Is Buying?,” and “ What’s Happening With The Economy? (Ray Dalio And The Bigger Picture) “. Also, my ever-expanding Facebook community needs your presence, so please join my Facebook page to get exclusive information about whatever is happening on my platform.
So, let’s dive in straight to the business. Talking about the psychology of money, you should know that; “Financial success is not a hard science. It’s a soft skill, where how you behave is more important than what you know”.
Therefore I want to hand you the top five takeaways regarding the psychology of money so that you can shift your manner to the sound and reformed behavior of rich investors.
To get our bonus tip, make sure you stay till the end of the blog. It will be worth your time. So, without much ado,
What are those rich investor’s behavior takeaway?
You must be ready to pay the price. And what does that mean?
Let’s say you need a new nice watch. You go to the store to check out the o fferings. You are really after something that will impress your friends. You now have a choice: either pay for the watch or steal it and run. Which one will you choose?
I guess that you would choose option number one. No matter your physical capacity. You would take out your card and swipe and do the right thing.
The point is that you know that having a new watch comes with a price, a fee. And it’s just the same with investing; it comes with a price too.
Let’s say that you bought an S&P 500 index fund in 1980. You’d still have to face about 13 years combined when your investment portfolio was down 20% from its high. And about 8 months when it was down 50%. That’s tough!
Stock-market investing is a great thing that enables wealth creation like few other options. But don’t try to fool yourself, it doesn’t come for free. All investors will experience volatility, and you have to look at it as the price you pay for a brighter future.
It’s a very interesting phenomenon that you can hand somebody a $2 million bonus, and they’re fine until they find out that the person next to them got $2.1 million and then they’re sick for the next year. Capitalism is great at doing two things: generating wealth and generating envy.
The urge to surpass your neighbors, peers, and friends, can help energize your hard work and strive to really “make it”. And of course, being motivated into becoming more productive and doing meaningful work is a good thing, but the social comparison can also cause us to feel like we’re never enough.
The type of envy which has emerged from comparisons of this kind has caused a lot of people to do foolish things throughout history. Some have leveraged their portfolios in order to move up to a higher pyramid, just to lose it all and then commit suicide. Some have acted on insider information and lost both their reputation and then later their freedom when they’ve gone to jail. Many have forsaken their families and had their partners leaving them or cheating on (or both) as a result.
By learning how to become a successful investor, chances are that you will at some point reach a level of financial freedom that the average Joe can only dream about. But you need to, at some point, accept that enough is enough.
Do not trade something that you have and need for something that you don’t have and don’t need, even if you kind of like to have it.
Crazy is in the eye of the beholder
At a first glance, it seems like a lot of people do crazy things with their money. Some spend it in ridiculous amounts on ridiculous items, and others hide it under their mattresses. But the thing to remember is that people come from different backgrounds with different childhoods, parents, life experiences, and educations. All this adds up to different perspectives and values. What seems crazy to you might make total sense to me.
So you become a better investor by acknowledging that we are different. This will make you less tempted to copy a portfolio or investment strategies that do not suit your goals. Acknowledging differences can also help you say no more easily to investments outside your circle of competence.
What do the Great Depression, World War II, The financial crises, and Covid-19 all have in common?
They were all events that shaped our society, had huge impacts on the financial markets, and were pretty much impossible to foresee. But human nature fools us into believing that we should have been able to know it would happen all along.
In reality, the things that will cause big fear among the investment community in the future are the things that are not likely to be foreseen.
The moral of this takeaway is that it is more useful to always prepare yourself, both mentally and financially, for a disaster that you cannot foresee than hoping that you’re able to react before everyone else.
The seduction of pessimism
If I were to give you a bunch of reasons why the market will crash later this year, mentioning the gigantic US government debt that stimulus checks might lead to the return of inflation, and perhaps something about new strains of Covid-19. You would most likely be intrigued. And perhaps end up with quite a negative view of where in the market cycle that we are at the moment.
On the other hand, if I were to give you examples of why things probably will continue to get better? By showing how life expectancy is rising, how sustainable energy is getting cheaper, or how computing power is exploding, you would most likely just shrug your shoulders and not think twice about it.
We all know that the pessimistic person always sounds so very intelligent, and the optimist sounds naive in comparison.
People tend to listen to pessimists more carefully, not only for evolutionary reasons but also because progress happens much slower than setbacks do. Progress rarely happens overnight. But setbacks often do.
Because tragedies and setbacks happen during much shorter time periods, it’s much easier to create an intriguing and persuading story around it, and thus it receives more attention.
To create an optimistic story about the future, we must look at longer time horizons. This often becomes vaguer and less dramatic.
For bonus tip:
A wealthy mindset will guide you to make use of the money you have. A wealthy mind means spending less, making wise investments, and their behavior is always looking for ways to improve financial standing with minimal risk.
Knowing that you will perhaps be more fascinated by a pessimist, and less so by an optimist, can perhaps help you become less asymmetric towards it in the future.
You are not going to get rich in the stock market without paying the price of volatility. Envy is the worst of the seven deadly sins. Never risk what you have and need for what you don’t have and don’t need. Different perspectives cause different courses of action to be reasonable or rational. Instead of trying to foresee disasters, prepare yourself mentally and financially so that you can survive them. And be careful when taking investment advice. Understand that pessimism appeals more to your survival instincts than optimism does.
If you liked this blog regarding the Top 5 behavior of the rich, please like and share it. I also urge you once more to subscribe to my platform and join my Facebook page. I always love hearing your views and comments.
Originally published at https://lifestyletipsbyantoaneta.com on April 19, 2021.