The Top 5 Investment Moves the Rich Make…

Dear Rich Lifer,

I’m going to go out on a limb here and tell you something you may not believe. Here goes…

When it comes to investing, it’s okay to make mistakes.   

Whether you’re just starting out, or heading into a new market, it’s okay to try something and fail. Even if you lose money while you’re still figuring it out. 

That being said, not all mistakes are the same. Some mistakes wind up being too big to bear for the average person. 

The trick is you have to make your mistakes early, and learn from them quickly.

That’s what sets the rich apart from the poor. 

Rich people fail, too! In fact, they fail just as often as everybody else! The thing that sets them apart is that as soon as they realize they’ve made an error, or that their plan isn’t going as well as they thought it would…

They learn from the mistake and quickly course-correct.

The poor, on the other hand, either fear the repercussions so much that they’ll never start investing… 

Or they get burned once and then quit entirely. 

That’s no way to live! Instead of sitting on the sidelines forever, wishing you’d made better investments, learn the rules that the rich use to guide their investments.

Don’t Dive in Without a Net

As I said, rich people aren’t afraid to jump in and get started. You might think, “Well, that’s easy for them to do, they never have to worry about the consequences because they have plenty of money to fall back on!” 

And sure, for the very few people who were born into wealth, that may be true…

But most millionaires weren’t born rich. According to “The Millionaire Next Door: The Surprising Secrets of America’s Wealthy” by Thomas J. Stanley, a full 80% of millionaires earned their wealth on their own. 

They were regular, everyday people – just like you and I – who made a decision to earn, save, and invest their way into wealth. 

They got started on their paths to wealth and then, they didn’t quit. That’s the number one secret get started and don’t quit. 

The poor aren’t poor because they were born under an unlucky star or because they keep trying and learning and trying again. The poor stay poor because they never get started. 

Sometimes, this reluctance to invest is from a fear of loss. They don’t understand investing, so they’re pretty sure they’ll lose out no matter what they pick. 

Combine that with a lack of real financial education and a general distrust of things that are hard to understand. All of that combined is why so many Americans don’t invest at all…

And the majority of those that do just play it safe by socking away a little in their 401k each month. At that point, they’re content to let whoever their company selected manage their funds. 

This isn’t the way to get rich. Think about it – do you know anyone at your company (or your previous companies) who struck it rich with this plan? It’s almost certain the answer is no. 

One-size-fits-all, set it and forget it style retirement plans were never designed to make anyone rich. If you want to be rich, prepare to roll up your sleeves and really get into this. 

Invest With Strategy

This might seem contrary to what I just said, but diving in without a strategy is a good way to find yourself broke and frustrated – fast. 

Rich people take a look at what options are available to them, then they make decisions about what investment opportunities are right for their lifestyle and the stage they’re in. Once that’s settled, then and only then do they make moves. 

When the poor decide to invest, it’s often because they saw something on a television show or heard about something that worked for a friend. Remember all the house flipping shows in the 2000s and then the glut of poorly flipped homes on the market that followed? We all know what a mess that turned into!

Diversify Intelligently

Once the rich find success with one aspect of their portfolio, they might look to grow their wealth by adding other income streams. 

Instead of going from Bitcoin to real estate to commodities trading, though, they add in new opportunities they understand. This way, they already have a good idea of how successful the new investment might be, and what to look for in order to decide if it’s a success or a failure.  

The buffet (that’s food buffet, not Warren Buffet!) method of investing – trying a little bit of everything but specializing in nothing – might seem like a great way to make a little money on a lot of things, but it’s really a great way to get frustrated and lose a lot in the process. Diversifying is good, but investing haphazardly is bad.

Invest With Your Head, Not Your Heart

People love going to Las Vegas because gambling can be exciting. The cheers when you’re up, the tension of not knowing when you should quit, and the adrenaline you feel when you push just past your comfort zone is enough to hook a lot of people for life.

But investing isn’t gambling – or at least, it shouldn’t be. 

The rich know that they might have to hold on to a stock through ups and downs, or that they might have to see a property through a down market. This is because they know they’re playing a long game and they’re making choices with their brains, not their hearts. 

Investing emotionally is a bad move that many poor people can’t shake. If you want to accumulate wealth, though, you have to develop this skill. Have to. 

Would you rather be the guy who bought into Bitcoin at the top of the market because of the frenzy over it? 

Or the guy who bought Amazon in 2008 because he saw that this weird little website was starting to become popular, and he was in it for the long game?

I know which one I’d rather be. If you’d rather be the latter, too, then learn to separate emotion from the situation whenever you’re making an important decision. 

Get Help When Needed

Finally, the rich get richer because they know when to ask for help, and they know who to turn to. From tax consultants who help them keep their money to subject experts who help them decide where to invest next, they’re not shy about finding the smartest person in the room and then hiring them if it will bring them good results. 

Going it alone sounds noble, and many people do it in the beginning. Spending a little on the help of a trusted advisor, though, can help you get where you want to go a lot faster. 

Mindset + Action = Results 

There’s no one magic trick to getting rich, but there are a lot of good choices to be made that can point you in the right direction. Once you’ve learned to invest like the rich do, who knows? You might just wind up the millionaire next door on your block.

To a richer life,

Nilus Mattive

Nilus Mattive

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Nilus Mattive

Nilus is the editor for the daily e-letter The Rich Life Roadmap and a Paradigm Press analyst.

Nilus began his professional career at Jono Steinberg’s Individual Investor Group, where he published his original research through a regular investment column. Later, he worked for a private equity business and spent five years editing Standard and Poor’s...

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