Imagine going back in time and giving yourself advice.
How many small decisions would you change? How different would your health, wealth and relationships be? What small decisions have transformed into big results?
Successful investing requires your decisions to compound over time. Good decisions allow compound interest to manifest your wealth.
Reduce or eliminate these mistakes and give yourself the best chance to succeed.

Mistake #1: Not Starting

There is never a perfect time to start. In 2009, the greatest buying opportunity of our lifetime most investors were scared or confused. Today most investors are afraid to buy new all-time highs for fear of a correction.
The major mistake in this thought process is you are considering price and not value. Value investing seeks to find good companies. This can be a $10 stock or a $1,100 stock. The price doesn’t matter, the value does.
Learn how to find valuable companies and become a shareholder.

Mistake #2: Starting Without a Strategy or Plan

Here is a plan that is doomed from the start.
Have money.
Open an account.
Start Investing.
Learn how to invest.
There isn’t a perfect time to start but there is a perfect way to start. Smart investors learn quickly to develop an edge. An edge is a strategy and tactics. It’s a system to assess profit potential in exchange for accepting risk.
Your investing strategy is your north star. It dictates your choices which keeps you in control. When you have a strategy making good decisions is easy. When you start investing without a plan your results will be inconsistent at best and your confidence will waver with every tick up or down in price. This is frustrating and an unprofitable battle.
How to define risk should be your top priority. Applying a risk plan from the start will give you the best chance to gain experience.

Mistake #3: Making Investments Based on Lazy Research

Picture buying a new house and the only fact you confirm is four walls and a roof.
You choose to learn nothing else yet you buy it anyway. Silly right? This is how too many people invest, it’s a travesty. Make me a promise and never invest using this same method.
Someone you trust has to do the investment research. It can be you, a stock broker or an advisor, but someone you trust needs to do it. Who do you trust with your retirement money?

Mistake #4: Investing Out of Your League

Should you have invested in AAPL when it was $700? I am not talking about whether or not you could afford it or even if it was value, I am asking if you had the skills to handle an adverse move in price.
Do you have the investing chops to flawlessly exit a losing position if it drops $100? I can’t tell you how many investors I spoke to in 2012 when this very thing happened and they were stuck frozen like a deer in headlights holding on tight to a six figure losing investment.
Being able to afford a big losing trade is different from being able to handle additional risk. If you earned your millions from a career or business other than the stock market, give yourself skills a chance to catch up to your wallet.

Mistake #5: Not Building a Portfolio

There are two simple methods to build a portfolio. Invest in multiple valuable companies and build out your model portfolio by adding new companies with your winners. The second method is to buy an ETF or Mutual Funds which by design are a professionally managed portfolio.
A key investing goal is adding to your winners. Using profits to buy new companies is a smart investment plan. Buy and hold is dead. Investing and closing your eyes for 50 years is not likely to bear fruit. As your skills improve and resources grow seek out new opportunities to increase the net worth of your portfolio.
Use profits to reinvest.

Mistake #6: Not Taking Advantage of Tax Deferred Growth

Retirement plans allow your smart investing decisions to grow under a protective bubble from the tax man. This means 100% of your profits can buy more great companies. You are growing your portfolio and delaying tax on the profits.
This is huge. You get a deduction and sheltered growth. Compounding at its finest.
401K, IRA, Roth IRA, SEP plans. Learn more. Funnel as much of your investments as you can.

Mistake #7: Making Emotional Decisions

Profitable investing is a numbers game. It’s all math.
For successful investors, there is no place for emotions. I am not saying to be a robot but success requires discipline. This assumes you have a plan in the first place.
Discipline is not the ugly word many of us imagine. It really boils down to taking the right action. Disciplined investing means making decisions based on the numbers we find in research. A company has cash flow or it doesn’t.
Emotional investing is most expensive when it comes to taking losses. We hope our losses come back so the stress of making a decision taken off our shoulders. This is how small losses become big losses. Emotion clouds the mind. Remember taking a loss is a business expense.

Recap:
Each of these expensive mistakes are in your control. Each is a choice. This is important to understand, you have control. There is a classic saying for professional traders. “Make a big list of what doesn’t work. Minimize those errors and you have a good chance to succeed.”

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