involves five distinct phases and once you recognize the many traps that arise during these five stages, you can readily avoid these perils. And what if you have already erred and somehow stepped onto an investing landmine? Don’t despair! The key is to better navigate those ticking time bombs going forward.
Remember, you don’t have to be perfect. The best investors just make the fewest mistakes, and they readily recover from the fumbles they do commit. The sooner you realize this basic yet powerful truth, the sooner you can begin to turn almost any perilous situation into a profitable one. If you don’t remember anything else from [this article], I would hope that you remember this crucial point: Unsuccessful investors focus on products. They’re constantly asking, “What’s the best stock to buy?” By contrast, successful investors focus on the process of investing. They ask, “What should I be doing to grow my portfolio?”
What Are Your Goals?
So many people simply say, “I would like to save more money,” or “I want to invest for the future.” Well, the first question you really need to answer is: For what purpose do you want to save or invest?
We all have personal goals. Some people would like to retire before they turn 60. Others want to build a dream house on the beach. Maybe your ambition is to be able to afford to send your kids to a private college. Or perhaps you’re itching to quit your job and form your own company.
All of these personal goals are also financial goals, because it takes money to achieve them. For example, you certainly can’t retire in comfort with an empty bank account. Neither can you launch a business without some startup capital.
Setting Goals Is The Foundation Of Successful Investing
Numerous studies show that people who engage in active goal setting — thinking about their goals and then writing or typing them out — overwhelmingly fare better than people who don’t set written goals. This is true in investing and throughout life in general.
There’s some science behind this, as well as some common sense. When you write down your goals, and especially when you look at them everyday, they serve as a constant reminder of what you want to achieve. A written mission keeps you focused. It gives you motivation. And perhaps most interestingly, declaring your objectives in black-and-white kicks your subconscious mind into high gear. Without you even trying, your brain starts thinking and strategizing about ways in which you can meet those goals — even while you’re sleeping.
Investors who don’t bother to define any personal goals lack focus. They buy investments indiscriminately, under the false assumption that simply “being in the market” is somehow beneficial. In reality, such misdirected actions are highly harmful. They frequently result in wasted time, money, and energy.
Individuals with hazy or generic goals (like “I want to be rich”) are unable to reach them due to an unrealistic or unknown assessment about what it takes to get there. Remember when I said earlier that