There are four parts to achieving financial freedom:
- Clear, specific goals
- Strong motivation or desire
- Know how
- Persistent action
All four of these parts must be rock-solid strong or you won’t reach your goals at 100%. If one or two of these parts are less than 100%, you won’t reach your goals. For example, if your goals are murky, then you won’t reach them. If your motivation is not strong enough, you won’t reach your goals. If you don’t know how to take care of your money energy, then it will dissipate and you won’t reach your goals. And if you do not take persistent action over a long period of time, you won’t reach your long term goals.
It’s daunting, but not impossible. And this is the reason that most people fail in their financial lives. They may get one or two of these parts correct, but it is the rare bird that can manage all four. Most people need a financial advisor or coach to help them implement this system. It’s something we do at Juetten Personal Financial Planning all the time. We call it the SmartMoney Rules™ Financial Freedom system. Think about it.
Last time I wrote about the most common money mistakes people make. One of them is thinking that investing is a game. It’s not. Investing is more like watching paint dry or tending a garden. I thought I would add to the last post with this list of the most common investing mistakes people in addition to thinking that investing is a game.
Investing mistake #3: Trying to out-think the markets
Even clients we work with fall victim to this investing mistake. It seems to be human nature to think we are smarter than everyone else. Especially men. I hate to tell you this guys, but we are not smarter than the market. No one can be because investment markets are made up of the collective wisdom of many smart people. So when you are trying to pick the next big thing, time the market or even speculate if this is a good time to invest, you are committing investing mistake #3.
Investing mistake #2: Ignoring the cycle of market emotions
We are human and therefore emotional. I get that. The problem comes when we ignore the cycle of market emotions and give in to fear and greed and change our investment approach based on how we feel. When you feel elated about your investments, that’s time to stay the course; when you are depressed about your investments, that’s time to stay the course.
Investing mistake #1: Impatience
This is similar to mistake #2, but I wanted to call out this mistake in particular. Unless you invent the next great technology breakthrough, becoming financial secure or wealthy takes time. And patience. The secret to investing success is not that complicated:
- 1. Create an asset allocation plan that fits you.
- 2. Use low-cost investment products.
- 3. Be patient.
That’s it. There are nt substitutes for any of these steps and, yet, the most common investing mistake we see is people being impatient and trying to hurry up investment success. It does not work.