I messed up... 5 investing lessons I learned the hard way
Learn from my mistakes so you don't end up making the same ones
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Happy Monday!
Let’s start the week off strong.
The agenda for today:
👉 Tweet/Quote of the week
👉 5 mistakes I made that you should avoid
👉 Upgrade to premium to get access to the meat and potatoes of The Profit Zone
Tweet of the Week
Quote of the Week
Spending money to show people how much money you have is the fastest way to have less money. We tend to judge wealth by what we see because that's the information we have in front of us. But the truth is that wealth is what you don't see.
- Morgan Housel
I started investing at 18 years old
But it came with a lot of trial and error.
The great part about starting young is that you’re playing with small money, so your mistakes aren’t as costly.
What better time to make mistakes and use them as lessons to better yourself as an investor.
In today’s newsletter, I’m going to be covering 5 of the biggest financial mistakes I made with my investment portfolio.
These 5 mistakes resulted in thousands of dollars lost, which was devastating at the time…
But in the long run, it was worth the the cost of admission.
The only real mistake is the one which we learn nothing.
Make a mistake once, it becomes a lesson.
Make the same mistake twice, it becomes a choice.
I’m going to teach you the lesson without you (hopefully) having to make the mistake yourself.
Not having clear investment goals
If you don’t know where you’re going, you will probably end up somewhere else.
Too many investors have no idea WHY they’re investing and WHAT the end goal is.
Make sure you paint a clear picture of what you want to achieve from your investments, because your strategy has to reflect the direction you want to go.
Focusing on the wrong type of performance
Are you a long term investor?
If your answer is yes…
Why are you worried about short term news?
Too many investors concern themselves with how the market is performing today and fail to look at the bigger picture.
If your time horizon is 20+ years, stop putting so much emphasis on short term market fluctuations.
In fact, use them as an opportunity to lower your average cost.
That’s how wealth is built.
Buying high, selling low
Fear and Greed: two emotions that can steer investors in the wrong direction.
When the market is rising, investors will tend to jump in and buy out of fear of missing out, A.K.A. FOMO.
A focus on near-term returns leads to investing in assets or using strategies that were likely only effective in the near-past.
When everyone’s talking about a stock, it’s probably too late for you to jump in.
Want to learn more about controlling your emotions? I wrote an entire post on it. Click below.
Thinking you can time the market
Do you have a crystal ball? No.
Nobody knows the perfect time to enter the market, and stop believing people who tell you they do.
Missing the top 10 trading days in the stock market has a massive opportunity cost.
The following table compares the total returns of a $10,000 investment in the S&P 500 between January 1, 2003 to December 30, 2022 and the impact of missing the best trading days.
Moral of the story: Get in and stay in.
Use dollar cost averaging to your advantage.
Failing to control what you can control
You can’t control if your stocks will rise or fall.
You can’t control if management will cut a dividend.
You can’t control inflation.
And you certaintly can’t control economics.
What you can control is how much you invest every month.
Focus on saving money, cutting costs where possible, and investing as much as you can.
It’s the surest way to increase the probability of reaching your financial goals.
Final notes…
Investing isn’t difficult, but people like to make it harder than it should be.
The blueprint is simple:
Understand your investor profile (risk tolerance, time horizon and end goal)
Buy stocks/ETFs that fit within that criteria
Set up a budget and save as much as you
Invest what you save and increase your contributions over time
Ignore short term news and the stocks your friend Jimmy is telling you to buy
Stick to the same strategy for as long as you can
Retire earlier than all your friends while they ask how you did it
If you want to learn more about how I’m investing, what my strategy is, what stocks I’m looking at as well as deep dives into market leaders, then consider joining premium.
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See you in the next one!
Alex (The Dividend Dominator)
Founder and CEO of Dividend Domination Inc.
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Some resources to help you make more money:
My Website - a one-stop shop for all things dividend investing.
Financial Domination - learn how to set up an effective budget, choose the right broker, figure out your investing strategy, use stock screeners to filter out the garbage and more. Everything I wish I knew when I first started investing.
The Complete Investors Accelerator Pack - everything you need to build a dividend portfolio that grows on itself. Learn more about dividend investing, how to analyze dividend stocks, what to do with your dividends and how to build a stream of passive income through the stock market.
Ca$hing in on Twitter - start building a following on Twitter and learn how to monetize it. Turn Twitter into your own personal cash-flowing asset that will pay you while you sleep.
My Full Stock Portfolio - get access to all of my positions and get updates every time I buy or sell.
Money Mastermind - the “Money Bible”. Myself and 29 other expert creators teamed up to create the most all-inclusive 280-page finance book on the market. Over 100 topics about money including real estate, crypto, budgeting, dividend stocks, online business, and more.
TweetHunter - let the software do the tweeting for you. The only scheduler you’ll ever need. This tool makes me money in my sleep. Give it a try for free.
Hipster Budget Guide - having trouble saving money? Learning how to budget is your solution. This book will show you ways to save money you never even thought of. Worth every penny.
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