Podcast Episode 275: Characteristics of the Worst Investors
Created: October 21, 2022
Modified: October 17, 2022

Podcast Episode 275: Characteristics of the Worst Investors

What You’ll Learn:
We all intend to be great investors but things often don’t go as planned. If you look at some of the worst investors out there, you’ll start to find some recurring traits and some mistakes that show up a lot. Hopefully you aren’t guilty of any of the ones we talk about on this episode.

Most of us strive to become better investors and there’s plenty of information out there about what you should be doing. What you won’t find many places is a list of things you shouldn’t be doing.

So let’s talk a little about that. Our podcast this week focused on the characteristics you’ll often find in the worst investors. We all might be guilty of these things at one time or another, but if we’re able to avoid making these mistakes regularly, we’ll be in much better shape financially.

Maybe the most common mistake that investors make is trying to get rich quick. Everyone is looking for the easy way to make money fast instead of following a plan over the course of many years. When people ask us what stocks they should buy, what they’re really asking for is an investment they can flip quick to use that money to buy something nice. Trying to make a bunch of money is how people end up losing a bunch of money.

Another investing mistake we see is when people fail to have a cohesive plan. This is one that can be rather innocent because you work to save throughout your career. But in doing so without a plan, you end up having a majority of your money in just a handful of investments and the lack of diversification could put your portfolio at risk.

Then there’s another trait you’ll often find in people that aren’t having much success investing and that’s the herd mentality. Instead of thinking independently, people are often swayed by the opinions of others. One of the worst mistakes you can make with your money is to compare yourself with others or follow the moves that friends and family are making without having your own plan.

Now, we talk about perspective all the time but how many people are maintaining that long-term view? Investing mistakes are often made when people make decisions based on a short-term view or by looking too much in the rearview mirror. And even on the flip side of the coin, people will sometimes take short-term money and put it into long-term investments and it can put them in a bind when they need it again.

One more mistake we talk about on this episode is focusing on areas you have no control over. Maybe this is something that plagues a lot of us in our everyday life, but it can bring us down when we’re dealing with finances. Think about what you can accomplish or what habits you can change to move you closer to your goals.

Most of these things can be avoided simply by having a conversation. By sitting down with people, we’re able to find out what they want to accomplish and talk about what they need to do. Our Money Map process is a great way to start that conversation.

1:27 – Trying to get rich fast

2:39 – Operating without any cohesive plan.

4:11 – Having a herd mentality rather than thinking independently.

4:58 – Focusing on the short term or always looking back

6:28 – Focusing on areas you can’t control

8:03 – Taking market losses personally

9:18 – Not being honest with yourself

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