It’s a week until 2018… and that means it’s time to start thinking of ways to better yourself – and your portfolio.
So here are three can’t-miss investment resolutions for 2018…
Resolution 1: Get in touch with your feelings… about money
It may sound obvious, but you need to like money in order to get more money. If – deep inside – you feel having a lot of money means you’re selfish or greedy, or if you think money is a little dirty or somehow naughty, guess what? You’re probably never going to be rich, or stay rich. If on some level you don’t like money, it’s unlikely that you’ll have a lot of it.
The reason for this is because your emotions, consciously or unconsciously, will get in the way of your path to riches. That voice in your head saying money is bad is going to stand in your way – it could be the biggest barrier to wealth of all.
To find out how you really feel about money, ask yourself if you’ve ever had thoughts like:
- Money is the “root of all evil.”
- Making money takes too much time and effort.
- If I want money too badly, other people will think I’m shallow.
- Money doesn’t buy you happiness.
If you’ve ever felt this way, your attitude towards money may be getting in the way of making more money. Rich people don’t have mixed feelings about money. They wouldn’t be rich if they did.
So stop and think about your real attitude toward money. In the new year, you may need to decide to embrace money and believe that “money is good.” Getting more of it will be a lot easier.
Resolution 2: Confront your biases – and defeat them
Unfortunately, there are a lot of other ways that your brain can get in the way of being a successful investor.
The number of investment pitfalls, or cognitive biases, that can affect investment decisions is huge. Many thick books have been written on the subject. I’ve written extensively about them.
They range from feeling that “this time it’s different” (status quo bias), only subscribing to viewpoints that agree with yours (confirmation bias) or thinking you know more than you really know (the Dunning-Kruger Effect). All of these biases can lead to bad, and expensive, investment decisions.
The best defense against these pitfalls is to educate yourself. You can start with the report we prepared that discusses 10 of the most common investment pitfalls, and how to overcome them. You can download your copy here.
Resolution 3: Learn from others’ experience
If you want to be a successful at anything, the first step is learning from other successful people. This is true whether you want to learn to fix a car, make chocolate chip brownies, or burp a baby. It’s also true when it comes to investing.
If you want to be a successful investor, take a look at what other successful people have said and done… how they’ve overcome struggles… the mistakes they’ve made… and the wisdom they’ve gained. Understanding how others have succeeded can dramatically shorten your learning curve.
So talk to someone who’s done it all before, and who knows what to look for, and what works and what doesn’t work. For example, if you’re new at real estate, you might talk to someone who’s been doing it for a long time.
Experience is a great teacher. But as an investor, learning the hard way can turn out to be a very expensive lesson. (I’ve certainly done my fair share of learning, as I wrote here, when I lost US$50 million of other people’s money.)
So instead of learning from your own mistakes, look to generally successful investors who’ve succeeded, and how have made some mistakes along the way, and learn how to be successful from them.
On their own, these resolutions won’t make you rich, but together, they could have a big impact on your portfolio.