Investment Mistakes. We all face challenges that apparently just seems to be part of the human condition. My investment mistakes are all things that have helped me to grow. Some of us experience more challenges than others, of course, and some of them we have no control over. Some of them we bring upon ourselves of course, and others are maybe a little bit of half and half. Maybe we’re not totally in control. As you go through life, you realize, there’s that famous circle where in the, in the center of the circle are the things you can control, which is typically your response and your attitude.
Spheres of Influence and Investment Mistakes
In general, we probably have some control over our response to our environment. We can stop as we get the stimuli and we get the information. We can try to develop techniques and tools as we get older to calm ourselves and to think, think through the issue. Ask ourselves, is it really the end of the world? While we can try to prepare for the unexpected, all of us have made investment mistakes.
Is it something we can manage? That’s the, the smallest circle. There’s a circle outside of that. If you drew a picture where there’s things that we can influence. And we probably have, influence over our environment in some ways, through the choices we make and the things we say, and the things we eat, and the things we do.
And our habits that we develop and trying to self-improve, trying to do self-improvement, trying to be better. That’s a lot of what Money Vikings are about. It’s about, techniques and tools so we can try to be better people and just be stronger and more effective. And then there’s this bigger circle that’s probably the biggest one, and that’s stuff we can’t control in our Country and World.
None of us can control, world affairs or economies. We don’t seem to control what family we’re born into or what country we’re born. Right away that puts a person at an advantage or disadvantage. A person’s pretty lucky if they’re born into a loving family in the United States.
1. Investing In Penny Stocks
Life and neither is investing or personal finance and building wealth that is riddled with challenges and mistakes that we make. And I have made a few. So my, my top investment mistake I would say was in terms of just pure investing was investing in some penny stocks at one point. And, you know, it’s just, it’s one of these things where I would say, Be very, so it’s okay to have a little bit of fund money that we talk about and a little bit of really high risk risk on money.
And so if you’ve got, you know, 90% of your assets in, you know balanced index funds and, you know you have diversified assets, you know, you have real estate investment trust and all kinds of stuff like that. And if you want to take 10% and you can control yourself and manage your emotions and ga quote unquote gamble, it’s not really ga well, it might be gambling.
But whatever you wanna call it, then that’s fine. And that’s what I did. It took a small amount, but it was still a mistake at the end of the day because I would’ve been better off taking that money and just throwing in an index fund. It was, you know, it just, I should’ve, I should’ve thought about it a little more carefully and thought to myself, you know what?
It seems too good to be true. It probably, And the penny stocks, I have to say some of them are penny stocks for a reason. There’s a reason that Wall Street and investors haven’t picked up on them and have not purchased a lot of the shares or been that interested because something just seems off or wrong with the business model. So that was one of my first big investment mistakes.
2. Not Developing a Mindset of Patience
Number two in investment mistakes is patience. You know, we really have to develop some kind of patience as investors because I just don’t think there’s a magical day that we wake up and all of our problems are solved in life. Or as investors, we have to kind of manage things along the way.
Now, as we build wealth, I think things do get easier, you know, as, as you pay off a home and get your mortgage. As you build investment accounts, things do get easier, I think over the, over the long run. But it’s not an instantaneous thing. It takes patience. You really have to cultivate patience. You don’t buy an investment property and then instantly, you’re a millionaire and you’re making tons of passive cash flow.
There’s a lot of time and years that go in to building all that. So being impatient at times was definitely something that I probably could have worked harder at. There’s probably some investments that I sold too early or sold at a loss that I probably just should have waited, you know, and probably would’ve been fine. So that’s the second one.
3. Three: Not Cutting Costs
Number three in investment mistakes is not cutting costs. We live, we live in a consumer society for better, for worse. We can talk about the pros and cons of that. But at the end of the day, you know, we have to really have some kind of control over our consumption because we are constantly bombarded with buy signals.
We’re surrounded by people with shiny things and the thing is, we all have different shiny things and we can’t have, you know, most of us can’t have all the shiny things, so, you know, I just, I’ve had to really take a hard look at the budget and where, where am I, where am I spending money, where I should really be a little more prudent and frugal and practical.
I’m not into austerity for austerity sake. I’m into frugality, but frugality is not being cheap. Frugality is about putting money and the, and the, and your capital. In its highest priority order for you, okay. For your priorities. You know, we talk a lot about collectibles on our YouTube channel. For, for somebody, there might be people out there that don’t like traveling, let’s say, but you know, the idea of going on a couple of trips every year and spending a few thousand dollars does not appeal to them. So for them, They might want to buy collectibles because that’s where they, that’s where their frugality comes in. That’s their highest priority. On the other hand, there might be people that they really, really value experiences, so they’re not gonna be able to buy as many collectible type items because they need to spend their money on travel experiences, things where they’re meeting new people, going to new places, trying new food. So it’s really just prioritizing. We’re not Jeff Bezos. We can’t have it all right in terms of buying everything and not even he can have it all. No one can have it all.
But you know, there, there just has to be some sense of priorities. So that would be my advice in terms of the budget and frugality really determine where your priorities lay. You know, maybe it’s one less European Vacation so you can send your child to a, a private school. I don’t know what it is, you know, whatever it is for you.
Maybe you love designer clothes? Okay, well, where can you cut back in other areas that aren’t as important to you? How can you get those designer clothes for a, for a lower cost? There’s one. It’s just asking those questions. And I have had at times had to just pause and ask those questions and really look in the mirror, really look at the checking.
I look at the credit card statement and I really take a look at it, put notes on it highlight it, take it out, look at it and say, oh my gosh, I’m spending a lot of money on XYZ category. Is that really where I want my money and energy to go? Maybe the answer is yes, maybe. Maybe you’re a foodie and it just means so much to you eating at nice restaurants. Well, in that case, that’s fine. You’re gonna spend more money on that. You’re gonna be cutting back though on other things to afford that priority. I would just say, take out the statement, go through it line by line, take a hard look where, and then ask yourself, where can I cut back? Where are my highest priorities being met?
And that’s how it goes. Everyone makes investment mistakes. Thanks a lot for joining me. Catch you all next time. Keep taking care of yourself, keep taking care of each other and building wealth!