Why does the average investor make so much less money than the expert? Well, these things happen for a lot of different reasons.
One of the most important reasons is that people don't know enough about money and don't have enough information, which in our time is more important than the regular education we get in school.
The average investor follows the advice they get from their financial advisors when making investments...
"Invest for the long run. Diversify. Buy low-priced stocks."
And they keep buying and losing. What happens, though, when the market starts to go down? What do the money experts tell them? ...
"Don't be afraid. Keep putting money away for the long term."
But how long is the time frame that "long term" refers to? In a type of business called "commodity futures," "long term" could mean 30 seconds. When it comes to business or real estate, the same phrase could mean hundreds of years.
Most people who put their money in the stock market are
people who are over 50 and will retire in a few years. What are these people going to do if the market crashes tomorrow, next month, next year, or in more than 5 years? How safe are they? Are they ready for that to happen?
According to an article in USA Today, the biggest fear of Americans is that they won't have enough money.
Do you realise? People in the United States don't worry about a nuclear war, the end of the world, or a new terrorist attack. Instead, they worry about not having enough money.
If that's the case, why do so many people invest without insurance? Why do so many people risk everything they've saved and everything they've worked for their whole lives?
Investing doesn't have to be a risky process. Even though there is risk, the investments don't have to be risky. And when the market goes down, you don't have to lose.
Please tell me...
Would you buy an uninsured car? — That would be completely crazy.
If you didn't have insurance, would you buy a house? — Doing that would be even crazier.
Are we on the same page?
If so, please tell me...
IF YOU DON'T HAVE INSURANCE, WHY DO YOU INVEST IN PAPER ASSETS? (Sorry to be so loud)
The typical investor is interested in typical things, which is why is typical. Things that are average are for people who are average. Average investors like lukewarm things. But if you want to be wealthy, you have to leave the middle.
Most investors make money when the market goes up and lose money when it goes down.
The smart investor makes money both when the market goes up and when it goes down.
When the market goes up, you can get rich, but when it goes down, you can get very rich.
So, the average investor doesn't buy any kind of insurance when they invest, but the smart investor does.
And guess who is making more money in less time and with little or no risk?
So, if you want to be rich, you need to think like one.
