Top Investing Mistake #1: Not Having the Right Mindset
Most people who start out investing are interested in learning about specific strategies. They learn about the details of rates of return, and the differences between mutual funds and buying individual stocks. They find out about the requirements for getting a mortgage, and how to deal with the issues related to rental property.
There is one small challenge to this approach. Before we can succeed with any of these individual strategies we have to have the right mindset. It’s like planning a long road trip before making sure our car will make it. Before we get in our car and start driving, we need to make sure that there is enough oil and coolant, and that the brakes are OK. We wouldn’t want to get stuck in the middle of the desert because there wasn’t enough coolant.
Yet this is exactly what most people do when they start investing. Without having the right mindset, we just start out by buying stocks or mutual funds. The problem is that our mindset is the ultimate source of all of our decisions. We will not be able to successfully make investment decisions until we set our brains up for financial success.
There are many people who have all the skills to become financially successful. Their only challenge is that they don’t have a mindset designed for financial success. They start businesses that grow, but one day they make a bad decision and the business goes bankrupt. They make good investments, but they don’t manage their risk so it only takes one bad investment for them to lose everything. It sounds silly, but it is a very common pattern. The trick is to get our mind working for us financially at all levels.
So, how do we do it? I suggest reading books, listening to educational CDs and going to seminars. For a list of books that we recommend, look on the right column of our blog. This blog is a good introduction to many of the concepts and ideas central to a wealthy mindset, but it is by no means a complete education.
One place I don’t recommend looking is in newspapers and other blogs. All newspapers focus on rapes, murders, disasters, problems and anything else negative. They will not help anyone’s mindset, including financially. Nearly all the blogs I have seen in the financial area are filled with information that supports a poverty mindset. There are a few exceptions on our list of featured blogs.
Related posts:
- Top Investing Mistake #9: Not Doing More of What is Working
- Top Investing Mistake #4: Not Getting Enough Information
- Top Investing Mistake #10: Not Finding Your Groove
- Top Investing Mistake #2: Failure to Launch
- Top Investing Mistake #8: Not Getting Buy-In from Important People
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is one of my favorite financial books of all time. It's an allegory about a guy who has a terrible job, and how he overcomes challenges to achieve his dreams.
