Why You Should Have An Abundance Mentality

One of the things I struggle with is having an abundance mentality. I find myself worried about not having enough time or money or clients or whatever…

When it comes to investing, having a mentality that says there is an abundance of opportunity to be a successful investor is paramount.

What on earth am I talking about?

In my experience, many investors see things like Bitcoin or certain tech stocks or gold take off like a rocket. They are left on the sideline while someone else got to ride the wave, and now they feel like they missed their chance. And not only did they miss their chance, they missed their big chance to make money in their portfolio. They feel a mix of guilt and fear and end up jealous.

Here’s the truth: you didn’t miss your one and only chance to make money in the market. The truth about making money in the market is to be globally diversified in big and small stocks in growth and value stocks. You offset that by short-term, high-quality fixed income down to your personal risk tolerance. Then you rebalance regularly back to your target.

You do this over your lifetime and you will be practicing the ways of the successful investor.

When you have the mindset of abundance, you don’t get bogged down with missing out on something. You can celebrate with those who got lucky, and then you can seek the next opportunity. When it comes to investing, as you regularly rebalance, you will find those opportunities over and over as you go.

Maybe an example would help. As the markets fluctuate, let’s pretend that the US market drops and the international market spikes upward. It is now time to rebalance your portfolio back to its target weighting.

Well, the US market now has their stocks on sale (because they went down), and the international stocks are now taking up too much of your portfolio. So, you sell what is high (international) and buy what is low (US) when you rebalance.

What did you just do? You took advantage of the opportunity to buy what is low and sell what is high. This is exactly what everyone knows they should do.

But most people don’t do this. Most people see the US market go down and immediately their brain goes into scarcity mode. They think, “This is bad. I can’t lose money. I should sell before I lose more!” And then, they do.

What did they just do in this example? They sell what is low and lock in their losses.

This scarcity mentality will kill your portfolio.

What is the solution? Having an abundance mentality. Work with a coach who shares an abundance mentality.

Are you investing out of scarcity or abundance? How does your adviser give you guidance?

If you’d like to hear more about how I help my clients invest, please contact me.

What To Do When The Market Goes Crazy

Recently, we’ve had some major volatility in the markets and people are wondering what they should do with their investments. In fact, Reuters recorded the biggest withdrawal of funds from the market on recorded history! (Story here)

Today, I want to address what people think happened and what really happened when these investors sold off in recent weeks.

What people think happened is they sold off investments that were going down to “stop the bleeding” of their money. They believed that they would be able to save money by getting out quickly and jumping to cash.

What really happened is they sold off investments and locked in their losses. They will not be able to participate in the growth when the market comes back.

Why do I say that?

Think of how you own your house. When the housing market goes down in your area, would you sell? No, of course not. You would lose a lot of money. What do you do? You stay in your house and wait until a better time in the housing market.

Similarly, when you own stocks or mutual funds, you don’t actually have money. You have shares, and these shares are worth money. Their value fluctuates over time, but until you sell your shares, you haven’t lost any money. You also haven’t made any money. That’s how the market works.

So what should have these investors done? In my opinion, they should have stayed put in the market and waited it out. By locking in their losses, they not only lose money, they also have the opportunity cost of being out of the market when it comes back up.

If these investors had a good adviser, the adviser would have done their best to talk the client out of selling their shares just because of a dip in the market.

If these investors had a good adviser, the adviser would have reminded them that when the market dips, it is time to buy more. It is not time to sell off.

Why? When the market goes down, it’s like a sale at the grocery store. You can buy more boxes of Mac & Cheese with $10.00 when they are $1.00 each versus when they are $2.00 each.

There are two main things that will help you be a successful investor for your life.

One - build your portfolio based on academic research and personalize it to your own risk tolerance.

Two - hire a coach who will help you build this portfolio and keep you on track.

Is your portfolio designed efficiently? Are you working with a coach?

If you don’t know how your portfolio is designed, contact me. I would love to sit down with you and help you understand what you’re doing so you can be a successful investor.

The Way Of The Rebel Investor

Last week, I talked about how Wall Street needs investors to buy and sell in order to make money and I teased that there is a way that you can get out of this way of investing and into a way that is prudent and based on academic research.

The way of the rebel investor is different than the way of the average investor.

Average investors look for what stocks or commodities are working right now and chase after them. Rebel investors ignore the hype because they know that what is hot now should have been bought before it was hot.

Average investors get scared when markets go down and move to cash to avoid further losses. Rebel investors smile when markets go down and buy more of the stocks the average investors sold at a loss. They know that when the market comes back that they can capitalize on these purchases.

Average investors have not identified their true purpose for their money and just want to make as much as they can. Rebel investors know what their true purpose for their money is, and they adjust their portfolio and lifestyle accordingly.

Average investors work with advisors and financial professionals who share their ideals and help them find what’s hot in the market now and get paid when average investors move their money around. Rebel investors work with coaches who share their ideals and help them build a prudent, well-diversified portfolio and get paid for their coaching by a fee.

Average investors build their portfolios in a hodge-podge manner and fill them up like someone in a grocery store without a list. Instead of following the list, they grab whatever looks good and when they go to check-out, they can’t cook dinner because the items they bought weren’t coordinated to go together. Rebel investors build their portfolio based on academic research and disciplined rebalancing. They are the grocery shopper who has a list, sticks to it, and has a wonderful dinner with all of the right items.

What kind of an investor are you right now?

What kind of an investor do you want to be?

I am looking for rebel investors who are ready to begin shifting their investing experience. I want to work with people who take their investments seriously because they know their future depends on it.

If this is you, reach out to me today and we will set up a time to talk!