Tag Archives: rich

Get rich in the stock market overnight. Myth or reality?

By Smart money, , , , ,

To be a successful investor it is essential to understand and overcome the biases that often lead to wrong investment decisions. A common misconception, especially among many new investors, is the belief that investing in the stock market can make them rich overnight.

The scenario seems real in that some investors end up making big gains at one point, but in this case, more often than not, the investment was made years ago.

Success is due to patience, emotional intelligence or vast experience rather than luck or a great trading opportunity that “struck” overnight. Financial literacy and staying up-to-date with the most important news and events are ingredients that also make the difference between investment success and failure.

The stock markets are constantly changing and it is not good to expect big and quick gains. This fact does not help you concretely, but, on the contrary, adds even more pressure on you.

That is why, before you actually enter the market, review the relevant information and be aware of the associated benefits and risks.

Perhaps along the way you will be pressed for time and this will make you want to “cut corners”, simplify complex decisions and thus become overconfident in your decision-making process. But keeping your expectations realistic not only gives you a balanced point of view, it also helps you be rational.

Moreover, because the decisions you make trigger certain processes, biases can actually prevent you from having an optimal approach (optimal does not mean perfect!).

At times when you seek to be perfect in this area, you begin to give too much importance to some things, leaving others on the outside.

With limited resources as an individual, it is better to seek an optimal and not a perfect allocation of them, because the inevitable errors will drain your energy and make you lose your focus.

You have to remember that in investing, you don’t aim for the impossible, you just have to eliminate the errors to become constantly better.

That is why, if you avoid major mistakes and have some understanding of the markets and the economy, the odds of becoming a successful investor are completely in your favor. But don’t think that this is the secret to becoming rich overnight.

Those who are extremely confident and also have the misfortune of having…luck in the beginning, believe themselves far above the level of those who have some experience and have also recorded losses among their gains.

But these lucky beginners will be the most shocked by the markets, and the return to the ground will be more painful for them.

By constantly learning about “investment psychology” you will know how to manage other emotional errors that can occur in any investor.

The most common prejudices and preconceptions that can lead to wrong investment decisions:

  1. Confirmation – some investors are overconfident in their decisions, focusing on data that seems to confirm, rather than disprove, this.
  2. Attraction to “sensational” information – as investors are bombarded with a plethora of information every day from financial commentators, newspapers and stockbrokers, it is difficult for them to filter it to focus on the relevant information.
  3. Aversion to potential losses – some investors refuse to sell losing investments in the hope that they will get their money back. But, in addition to money, they can also lose their self-confidence.
  4. Incentives – the power that earnings and incentives can have on human behavior often leads to exaggerated frenzy.
  5. The tendency to oversimplify – in seeking to understand complex matters, investors tend to want simpler explanations, but some matters are inherently difficult to explain and do not lend themselves to simple approaches.
  6. Hindsight – this state of mind prompts investors to eliminate objectivity in evaluating past investment decisions and inhibits their ability to learn from mistakes.
  7. Confidence Transfer – Speculative bubbles are usually the result of groupthink and “herd” mentality. This concept describes a certain kind of inner comfort that an investor can feel when they think that “others are doing the same”, even if their decision is not necessarily a good one.
  8. Neglecting probabilities – investors tend to ignore, overestimate, or underestimate the likelihood of outcomes other than those they have calculated. Most are inclined to oversimplify the process and allocate a single point estimate when making certain decisions.
  9. Anchoring in the past – represents the tendency of investors to rely too much on a reference or information heard in the past when making a decision.

To remember :

  • Understanding these biases can lead to better decision-making, which is fundamental to reducing risk and improving investment returns over time.
  • Shortcuts especially do not work in the financial capital markets. Make sure you follow a disciplined, rational and balanced approach to investing, always keeping in mind the long-term perspective, company fundamentals and market analysis of the sector concerned.
  • Investors who want to take shortcuts often end up losing their invested capital and blaming the markets for their own preconceived decision.
  • The reason our mind tends to simplify or make decisions based on trusting certain situational patterns without applying its own filters is because it wants to reduce energy. Thus, if you are just starting out and want to become a profitable investor, you need to make sure you have the mental energy and patience to avoid these prejudice traps.
  • Financial literacy is what makes the difference between investment success and failure. Invest in yourself first, in your education, to make sure your money starts working for you and not the other way around!

7 mental mistakes that prevent you from getting rich

By Smart money, , , , ,

The first step to gaining wealth is to get rid of preconceived ideas and bad mental habits that pull you down.

Which are these?

1. You’re just focusing on the near future

Do you know what people’s greatest regrets? The fact that they did not start saving earlier. Saving and investing money for 30 years is often overlooked in favor of spending money for an immediate need. Whether we are talking about a phone, a car or a house, it will always be something that seems more important than saving.
We place too much emphasis on what happens in the next few days and weeks and little emphasis on what will happen over a year … or, not to say, over 10 years.

2. You hate moments when you lose money

Studies show that the so-called ‘pain’ caused by losing money is more than twice as much as the pleasure we feel when we earn money.
This mental blockage often makes you make the wrong investment decisions and stop taking risks that would be worthwhile.
For example, a bet on throwing the coint, which would bring a $ 00 loss if the guesse is wrong.  Although a $100 gain (chances 50-50) would make this bet a fair one, most people would only accept the bet if the win would be $200 or more.

3. You are overconfident

Often trust is the key to success, but there is a limit. The point is that not all of us can be better than the average.
When it comes to investing money, too much self-confidence makes people take risks that they later regret; makes us believe that we can “beat” the market and that we can invest large amounts of money in one thing, without diversifying it.

4. Try to rationalize the wrong decisions

Throughout your life you will make a series of financial mistakes. It’s a sure thing. What matters is how you will come back after these.
Instead of recognizing and correcting these mistakes, we will often try to invent reasons that make our mistakes decisions that seem rational.
Sometimes, the notion that “we’ve made a bad financial decision” might hit the idea of “I’m good at managing the money.” Instead of pretending it is not a big problem, it would be best to correct this and move on.

5. You get financial decisions based on emotions

While managing our money, we need to be aware that our goal is strictly a practical one – making money. In reality, however, we often make decisions for emotional reasons, and so we get into the situation where financial goals are affected by other things from our everyday life.
The conclusion? If you want to get rich, you have to make objective financial decisions, or at least avoid doing something about your money when you know that you are not in a very good emotional state.

6. You rely on what seems to be good

We often base our decisions on the information that comes out more clearly in our minds. For example, unlike a car crash, the crash of a plane is always a news story, so we are automatically more fearful of flying, even though they produce much less deaths than land-based accidents.
The same must be done in the case of our finances. We often read news about business people who have been enriched by successful investments, or people who have won the lottery. For this reason, it seems to us that winning the lottery or that succeeding to become successful business people is much easier than in reality.
Build your financial decisions on statistics and research, not on news or spectacular information.

7. You lack self-control

With so many opportunities to spend money, saving seems to be the last thing you want to do. However, it is necessary to start saving and investing as early as possible if you want to have at least a chance of enriching yourself.
A little financial discipline will help you a lot in the long run, and after all, you are the only one responsible for your own personal finances.

7 things learned from the richest people in the world

By Smart money, , , ,

What can the richest people in the world teach you?
Very simple – probably you immediately realized – can teach you how to get like them. That’s rich.
Because we all have the ability to find our own way to prosperity. Only some have already reached “destination” …
You would be surprised to find that the richest people on the planet are not at all “super-humans”. In fact, they are not very different from ordinary people (obviously, if we do not take into account the size of bank accounts).
But they still have something special: a different way of looking at the world, which allows them to identify opportunities and turn them into a successful big business.

Here’s how they are structured and what the richest people in the world do:

1. They really like to do what they do.
They do not generally compromise, but they are pursuing a career in a field that really means something to them. In other words, they apply the “choose your profession, which will make you joyfully awake every day.” And if they do not find a job to satisfy their aspirations, then they invent itthemselves.
Due to the fact that the rich do only what they really like to do, they dedicate themselves to their work, continue to look for ways to develop their professional lives and do not waste their time on nothing.

2. Progressing permanently.
Whether it’s the latest advance in technology or a better way to communicate with their team, the very rich are constantly learning and keeping in touch with the newest directions of development to improve all aspects of life.

3. They are constantl ymaking  changes.
The truly rich often analyze the situation in which they are at one point and the direction in which they want to move and then make the necessary changes. Instead of being stuck in a company (or in a relationship) that does not really satisfy them, they prefer to go and look for better choices.

4. Getting totally involved.
They voluntarily dedicate their time and energy to those activities in wich they strongly believe. Very wealthy people always praise the efforts made by employees and truly appreciate those who work for them.

5. “Bad luck” is not part of their vocabulary.
The rich believe strongly that the notion of “bad luck” does not exist and that the situation they have at a certain moment is the result of the choices they have made in the past. They are involved in many positive things: doing physical activity, eating healthy, working hard and reading a lot. All this helps them identify new opportunities to earn money.

6. They ask many questions.
The very rich always ask questions and they are very good listeners. They are motivated by the desire to learn and understand the things that happen in the lives of other people. Some of their best ideas come from these conversations, because they really “listen”.

7. They do not have “wishes” but they set “goals.”
We often hear people saying, “I want to be rich,” or “I want to find another job.” The richest people have come to this because they have set some goals, not because they have made wishes.
Many of them set out each year an important goal they want to achieve. They do everything they can to avoid the loss of time, so they make daily lists of things to do wich they finish.

7 mistakes with money that rich people do not do + 7 tips

By Smart money, , , ,

One of the characteristics of successful people is that they know how to efficiently manage their personal finances and not make big mistakes with money.
But they were not born scholars.
They invest in financial education and thus understand how they can avoid the main threats and mistakes that stand in the way of prosperity.

Here are 7 mistakes with the money that rich people do not do and 7 tips:

1. DO NOT spend more money than they gain.
The main skill in money management is to spend less money than you earn. Some of the planet’s richest people have applied this principle in full.
For example, Sir John Templeton, one of the largest investors in the world, saved 50% of his income, even when he earned little. But if you save that percentage of income seems too much to you, it’s no problem. You can achieve financial success and save only 10-15% of your income, or even less.
Tip: Learn to spend less than you earn.

2. DO NOT focus on price, but understand the importance of value.
The price you pay for what you buy is just a part of the overall picture. Successful people also think about the value of the goods.
When investing, they consider the possibility of increasing these businesses. As far as personal things are concerned, they are always interested in the quality and lifespan of these products, not just their price.
Tip: Buy quality products that last for many years.

3. DO NOT throw money on interests and commissions, know how to manage bank accounts.
A credit card is very expensive because of the high interest you have to pay. Successful people are very careful about commissions, such as how much they pay for using the ATM or other transactions.
These commissions are easily avoided if you understand how the system works and you can choose a great bank account.
Tip: Review your account statement once a month, and you’ll understand the charges and fees charged by the bank.

4. DO NOT forget to adjust their financial plans after a major change in their lives.
Did you get married soon? Waiting for a child? These are a few important financial steps that successful people manage efficiently.
It is essential to make financial adjustments when the circumstances of your life and your family change significantly.
Tip: At least once a year, you should carefully analyze your life and financial plans (preferably with a financial specialist).

5. They are NOT satisfied with a fixed income but always seek ways to increase their income.
Some people will never ask for an increase in salary, or they will simply be pleased with a 1-3% increase. Unfortunately, such a rate of growth is lower than inflation, which means that it virtually reduces your purchasing power. Instead, successful people are constantly looking for new ways to increase revenue.
Tip: Go to courses that improve your professional training and try to contribute with ideas to increase the productivity of the company you work for.

6. They DO NOT claim to know absolutely everything about money.
Successful people know that the world we live in is very complex. When it comes to personal finances and money, there is a lot of information available. That’s why successful people like Warren Buffett know their limits and focus on their strengths.
Tip: Continually improve your knowledge of money and investment. If you have not done already, read the most important books in this area.

7. Do NOT take unnecessary risks.
Warren Buffett has remained famous because he said “the number one rule is never lose money.” But all types of investments have a certain degree of risk.
So successful people use two important tools to avoid losses. They understand the role of insurance (buildings, cars, life, etc.) to control certain risks, but also the great importance of diversifying investments.
Tip: If you are not too sure you understand how a certain financial instrument works, just act slowly and ask questions until you really get it.

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