Investing in a business and being a market participant is easy, but being a successful investor is not easy by any means. Most of investors fail to achieve their expected goals even after investing a good amount in their selected business sector. The failure is normally generated from their own acts and thoughts.
It is not hard to understand: If someone tries to run before they can walk, they simply can’t run. It’s really that simple. Likewise, if they disregard the market factors and focus on only one (like technology), can they stay holding their business? Some investors fail if they lack overall financial planning. Some others fail because of the failure to understand the tax consequences of particular strategies. Many others can not be successful due to their impatience after investment. Although all of the above-mentioned factors are crucial to an understanding before investing your money, the most important element is in yourself; your patience.
The situation is like this:
Heaps of extraordinary financial investors, creators, and monetary organizers have set out with strategies to produce an abundance of wealth. Yet, tragically, numerous financial investors don’t design, don’t explore, and for the most part, they allow their feelings to take control while settling on investing choices.
Among others, the main reason that most investors fail is that they confuse investing with gambling.
In the vast majority of the circumstances, financial investors themselves are their most exceedingly awful enemies. Although the theory says that financial investors act normally to augment their results, a brief glance at exact proof recommends that the inverse is valid: in reality, we are generally dependent upon feelings and unreasonable conduct.
Not being able to gain control of emotions is the most likely reason for one to fail. A domino effect is often inevitable for emotional traders; one loss will cause 20 more for them. Even knowing this fact, most people are just not able to acknowledge it and keep repeating the same mistake time and again.
In a number of situations, the following reasons such as dreaming to be rich quickly, insufficient funds to invest, inability to choose the right information about making a suitable investment, being unnecessarily emotionally guided, etc. seem to be responsible for the failures of investors.
Dream of getting rich quick
This is maybe the most perilous idea for any Investor to have. Youthful and new financial investors often share the bogus thought of the ‘market will make you rich. Remember that there is no easy route to progress and if something sounds unrealistic, it presumably is.
What sets good and bad investors apart is the ability to survive in the market in the long run. Going through all the bull and bear cycles will make you stronger. All investments have their ups and downs. In order to become a successful investor, it requires something more than skills, it takes dedication, discipline, and other valuable attributes combined.
The main trick to this is to never give up. It is because only those who have been standing will be the ones who are winning. If you want to get rich, try to get rich slowly. Yes, it is difficult unless you start enjoying the journey instead of dreaming about getting rich every 2 hours.
Why do stock investors fail?
Most investors lose money on the stock market. And it generally happens consistently over the long run. It is not simply that so many investors end up with remarkably poor outcomes in spite of their high efforts as well as an easy approach to financial education and all the free information out there.
Although the stock market is a great long-term wealth-generating machine, many investors face losses because of their own weaknesses. Financial markets often behave the same, expected way. These markets have always dynamic prices that move up and down, however, investors repeatedly make the same investing mistakes over and over again.
Therefore, although investing in financial markets over the long term is an excellent journey to wealth, the path is full of volatility and prices can move frequently over short periods of time. If you have patience and a sincere interest in learning from past mistakes, you may justify yourself as a successful investor in the stock market. Generally, this idea applies to most other businesses as well.
-Investing in an unknown field
The market has various business options available. Even though when you see others being successful in a particular sector, that moment can be very complex for you. That’s why new traders should not dive heads-on into these market tools without a full understanding of the way they operate as well as their pros and cons. A good return on your investment requires a combination of your sincere interest in it, the capability of filtering out the right information, and long-time patience.
Why do real estate investors fail?
Real estate investors may fail to vary degrees. The most common way is for investors to try a strategy such as flipping or renting out properties at will. Then they enjoy a bad experience and swear completely.
Similarly, you obviously fail in the real estate business if you don’t invest in it. You can’t be a success as a real estate investor without investing in it. However, I have seen many people enter a state of analysis paralysis. In this state, they hope to continue to learn more than needed before investing.
In addition, you may be a victim of some fake news. Traders who rely solely on the predictions and recommendations of others often fall into these false rumors and news. Remember, when the news finally reaches your ears, you are definitely not the first person to hear it. Someone must have already profited from spreading the information. This fake news phenomenon almost equally affects all sectors of investment/businesses.
As described above, investment basically requires the investor’s control over impatient behavior or habit. Bad behavior like impatience can lead to repeatedly and consistently buying and selling at the wrong time. Such trades in bad times can prevent investors from reaching their satisfactory financial achievements.
Among others, the main reason that most investors fail is that they confuse investing with gambling. The investment is a long-term deposit, and the expected return is consistent with the risk taken. Many new investors believe that they will get a rate of return that is higher than the market. They will not. Investment should not be considered gambling, you should try to invest with odds in your favor.
The Misconceptions of most Investors and how they influence decision making
Unfortunately, the common attitude of investors is that the return on their investment is tied to the market return. This is not true. The investor should negotiate a maximum rate of return that they are willing to accept in the future and stick with it, regardless of what happens in the short term.
This way they can capitalize on any such favorable market period in order to gain profit on their investment. However, if you do this, you must be prepared for occasionally being wrong (which means you will be right twice), so your average return will become negative as well.
Another important factor for investors to take into consideration is avoiding unnecessary risk. An investor should only choose the investment that has a higher probability of big profit, rather than investing in something with no hope of getting a good return.
The risk you need to avoid is either unpredictable or unnecessary risk. Usually, avoiding an unpredictable risk is easy to do. You can simply avoid speculation and short-term trading.
However, this does not eliminate all the risks associated with investment since it is still subject to the laws of chance. Therefore, the only way to avoid unnecessary risk is to accumulate knowledge and experience so that you can make your investment decisions with less uncertainty.
Bottom Line
Having the Market’s knowledge is only half the job done. Most people fail with their investment even if they know a lot about the market, but can not implement it correctly or completely. Indoctrination of the public and students with false information that trading creates very high returns often makes them believe that investment advisers know everything about investing, and investors should follow them blindly without any analysis or consideration. Therefore, it is always necessary to filter out any information you have been fed.
