Latest / Money Grows on Trees / #237 - 10 Investing Mistakes In Under 15 Minutes

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#237 - 10 Investing Mistakes In Under 15 Minutes · Money Grows on Trees

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  If you are managing your money and your investments emotionally, you're probably
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  going to make the wrong one. It's about time in the market, not
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  time in the market. Which means as a human being, you have to be correct 100% of the time.
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  And I can guarantee you, as a human being, you will not be correct 100% of
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  the time. I don't know if you're going to make money in the market this year. The market doesn't know
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  that you own it. I don't know if you're going to make money in real estate the next two or three years.
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  I don't know. But I do know long-term in good quality assets, you
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  can do really well. Because by the time they get to 50 and 55, and I say it all the
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  time, they say, I wish I had have, started sooner.
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  I'm Lloyd James Ross, seven figure investor and entrepreneur and I've helped
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  thousands of business owners and professionals turn financial stress into
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  success. If you're stuck in old money habits, overwhelmed by investing
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  or unsure where to start, this is for you. I'll give you the mindset
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  and strategies to take control, grow your wealth and achieve
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  financial freedom. It's time to make your money work for you.
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  Here are the top 10 investing mistakes in under 15 minutes.
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  You're probably making one or five or all 10 of
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  these mistakes right now and trust me, they're costing you years of
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  compounding growth and financial peace. So in the next 10 minutes,
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  I'm gonna break down each of the 10 worst investing
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  mistakes you can make and how to actually avoid them
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  and never do them again, all right? So they're fast, they're brutal, no
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  fluff, let's go. Number one, chasing hot stocks. Now,
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  this happens as soon as a stock goes up drastically in price, people
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  want to know about it. This happened with GameStop, if you remember. The
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  GameStop stock jumped, everyone started talking about it,
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  and of course, the actual underlying business that it represented was crap, and
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  they should never have touched it, but they only wanted it because everyone else wanted it. And
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  this is what happens if you chase hot stocks. The same thing happened with NVIDIA, and now NVIDIA's come
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  right back because China's starting to replicate its chips, and it's starting to get hit
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  from a business standpoint. So chasing hot stocks is not
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  the way to get ahead, because by the time you've discovered them,
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  it's usually at the very top of the market, all right? So
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  chasing hot stocks is not a good strategy. You wanna buy stocks in
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  businesses you understand, and that will stand the test of time, not
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  just a hype. The second of the 10 investing
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  mistakes is timing the market. This happened
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  recently with gold. As soon as gold went up from $2,500 an
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  ounce to $3,500 an ounce in six months, everyone
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  was starting to talk about gold, which means everyone now wants to own gold. That's
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  called trying to time the market. You're
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  bouncing in and out of the market. To buy gold just
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  because it's up means you're trying to get it on an upswing.
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  And generally speaking, if you do it there, you're going to find
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  that the next day or two, it's going to come backwards. And this
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  also happens when there's the trade war that's currently happening at the moment between the
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  USA and China. People are
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  trying to time the bottom. And they're trying to then get out. And so
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  they're trying to buy at the bottom, buy low, and they're trying
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  to then sell high. And they're trying to play this game of
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  buy low, sell high. They're trying to dance in and out of the market. And
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  the reason why that doesn't work in anything, in crypto, in gold, in
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  stocks, in index funds, is because you
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  have to make two decisions. One, you have to decide when to sell. And
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  the second decision is you have to decide when to buy back in. Which
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  means as a human being, you have to be correct 100% of the time. And I can guarantee you,
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  as a human being, you will not be correct 100% of the time. Even as an AI
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  bot, you will not be correct 100% of the time. Because even
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  if robots could time the market like that, they'd already
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  be doing it, and all the assets in the world would flow to them. But they can't, because
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  no one can. So it's about time in the
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  market, not time in the market. So buy it, hold it for a long period of
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  time, and your odds of making money go up drastically. The third
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  investing mistake that people make that I don't want you to make is
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  not understanding what they own. So people will buy an
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  index fund or they'll buy stocks or they'll buy crypto.
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  They don't even know what they own. And so of course, when the market gyrates
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  and gets volatile and starts moving around, especially when it collapses, they
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  freak out because they actually don't know what they own. They
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  think a stock represents a blip on a screen, on a chart. It
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  doesn't. It represents legal ownership of
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  a business, of a company, which means if
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  you know about the business, you know what you own, which
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  means you're not susceptible to diving out of it or being scared
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  out of your stocks or scared out of your investments because of what you don't realize you
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  own, okay? So recently for me, we owned some
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  Chinese equities and when the stock market collapsed by
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  about 20% after the tariffs came out, 10, 20%, People
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  say, ìWhy, Lloyd? Youíre going to buy it? Youíre going to own that stock?î Iím like, ìYeah, I own the business.î ìOh
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  my God, it just fell.î So what? The business is going up in value. Why
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  would I care what the price does? So understanding what you
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  own will prevent you from being scared out of what you have. Greatest
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  investing mistake people make is over-diversifying. It
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  seems ridiculous, I know, because diversification is mitigation
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  of risk. I understand that. But most people over-diversify.
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  What does that look like? It means they've got one or
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  two properties. They've got index funds
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  multiple they've got like five or six or seven index funds they own collectively like
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  4 000 businesses they own a little bit of gold they own a little bit of crypto
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  they own a little bit of art they own a bit of lego they've even got this
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  nft here they've just they own everything they own so much
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  there's no more risk in it which means there's no return So
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  yes, you'll get smoother returns, but I would much prefer
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  a lumpy 15% a year than a smooth 4% a
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  year. So when you over-diversify, you actually diversify your
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  returns. So to avoid diversification, you
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  will be fairly diversified with three assets, either a piece of
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  real estate, an index fund, and perhaps something else, or a business. But
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  I own three stocks, and within those stocks, there are some wonderful businesses, and
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  I'm fully diversified, and I'm very happy there. So be careful you
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  don't over-diversify. The fifth greatest
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  investing mistakes people make is they under-diversify. This is
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  ridiculously contrary to what I just said, but they'll put everything
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  into Fartcoin. Like some person, can
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  you believe this? They took a million dollars and they put
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  it into the HuckTua girl coin. The
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  HuckTua girl, HuckTua, spit on
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  that thing. That's what they put it into with a meme coin. That's
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  what they did. And they lost it because she rug pulled everyone. That's
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  under diversification. It's ridiculous. This is what people do. They
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  also only invest in one piece of property. That's also under diversification. They'll
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  invest in one stock from one business. For example, if you had have held stocks, just
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  one stock in Virgin Airline here in Australia, after the COVID, you'd have no money
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  left. So be careful you don't put all of your money into one
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  stock or one business. It's nice to have two or
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  three. Three is good. Perhaps a house and two or three other assets
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  is fine. That's diversification. It does mitigate risk. And
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  I definitely wouldn't suggest full porting into one asset class.
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  There is a saying from Andrew Carnegie that says, put all your eggs in
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  one basket, but watch the basket. I agree with that. But
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  most people don't have the capacity, the financial IQ, or the patience,
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  or the ability to do that. So I would say, just
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  put it in a couple of baskets, okay? Just quickly, if you're ready to
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  take control of your finances but feel stuck on where to start, I
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  have a solution. My book, Money Buys Happiness, simplifies
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  investing and wealth building with practical steps to help you achieve financial
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  peace. Get your copy via the link in the show notes and let's get your
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  money working for you. Now back to the episode. The sixth
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  most common investing mistake people make is ignoring fees.
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  This happens a lot to people's superannuation and 401ks. They
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  don't realize that their particular fund manager is charging them 1% or
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  2% annual management fee to do nothing to
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  actually underperform the index. And so fees do add up
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  over time. And this is why I'm a big proponent of investing in low cost index
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  funds over real estate. Because if you look at real estate investments, for
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  example, if you buy a property investment, you gotta pay stamp.
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  So it's a million dollar investment. You gotta pay about 60 or $70,000 in stamp duty.
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  That's a fee. Then you've gotta pay body corporate fees to
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  manage the apartment. That's a fee. It takes away
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  your cash return. Then you gotta pay a property manager to look after it. Then
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  you gotta pay maintenance costs. Fees, fees, fees,
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  fees. And by the end of it, you've got, after inflation, negative return,
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  cash return on your property investment under the current market conditions. So
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  you've got to be very careful of these fees. They're always hidden in
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  things. And if you compound fees over long periods of time, that
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  1%, 2% can translate to millions of dollars lost
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  on your capital. All right, number seven greatest
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  investing mistake people make is reacting emotionally. And
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  this is what happens when you don't understand what you own, if you're trying to time the
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  market, if you get caught up in all the noise from the news. The news's job is
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  to stoke fear in you, and that's what it's great
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  at doing. It's what sells news. But when you start to buy into
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  the fear mongering, and they call it FUD, fear,
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  uncertainty, and doubt. And if you buy into the FUD, then
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  you can create sort of these emotions in yourself and if
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  you are managing your money and your investments emotionally, you're
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  probably going to make the wrong one. So try and be logical for
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  the signal, not the noise and reacting emotionally
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  to things, sleep on it before you make decisions. That's one way to overcome these
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  emotional decisions that people make that usually end
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  up with them shooting themselves in the foot. Number
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  eight of the worst financial or investing mistakes you
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  can make, following financial influences without vetting them.
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  So for example, if you're on TikTok or you're on Instagram, whatever
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  it is you're on, there are people out there promoting shit
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  coin. And obviously the Huck tour girl is a great example of
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  that. For a moment, she was an influencer and
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  she was getting everyone to buy her meme coin and then she rug pulled everyone and they lost money.
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  The same thing happened to Trump when he did his Trump coin. But
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  you've got to vet the influencers. So like what portfolio
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  do they have? What do they invest in? What is their skin in? They've got
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  to have skin in their own game. But not just that, do you want
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  the life they have? And if the answer is no, don't follow them for those things. Vet
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  people, not just influencers, but vet anyone that you're taking and
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  any lessons from, just understand like do I want to
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  have that part of their life that they're talking about? If the answer is no, don't listen to
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  them. But vetting them is important and
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  you tend to vet them by watching how they are long term, off camera,
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  on camera. Do you share the same values?
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  Okay, so making sure you're vetting them, not just following blindly. I don't know how many
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  people had this one person When, before
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  I was verified on Instagram, I used to have so many
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  scam accounts built of me. And so one lady, she said,
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  Lloyd, I've just paid the money. I'm like, what? What for? She goes, the crypto
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  thing you said. I'm like, what? No, what? What? She goes,
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  yeah, you DM'd me. And all these like messages there, like, I'm like, oh
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  my God, and you gave them money? She goes, yeah. I said, how much? She goes, 250 bucks. I'm
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  like, what? Why? So
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  she didn't vet. I mean, you only have to follow me for five minutes to know how much I
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  hate Bitcoin and crypto. And she still did it. So just
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  be very careful. Look at the verified badge. Follow them
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  for a while. Get to know them. Do your values align,
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  OK? Vet them. Don't just follow them blindly. Number nine.
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  of the worst investing mistakes you can make is to think short term. I
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  had this lady reach out to me recently. She goes, Lloyd, I'd like to learn investing, but
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  I want to do it faster. Join the club. I
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  want to get a higher return, but do it quicker. Join the club. Everyone wants
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  to do that, but that's not just because you want it that way doesn't mean it's going to be like that.
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  Warren Buffett's got this great saying, and Warren Buffett's the greatest
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  investor who's ever lived. He said, you can't have
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  a baby faster by getting nine women pregnant. Great
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  things just take time. And if you do speed up the
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  pregnancy process and you have a baby at six months or seven months, the
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  baby can die. So just because you want it in
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  a shorter time frame doesn't mean that it's good for you or good for your situation, all
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  right? So you can't have a baby faster by getting 9 women pregnant. So
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  just slow it down and understand that wealth takes time. I don't know
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  if you're going to make money in the markets this year. The market doesn't know that you own it. I
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  don't know if you're going to make money in real estate in the next 2 or 3 years. I don't know. I
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  don't know if you're going to make – I don't know. But I do know long
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  term in good quality assets like certain real estate and like
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  certain index funds and shares, I know
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  long term you can do really well. But over the next year, no
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  one knows what the market's going to get. No one could possibly have known that Trump was going to pull
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  out Liberation Day and start tariffing China
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  145. No one could see that. So I don't know what's going to happen the next 12 months. No
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  idea. But thinking short term is a massive error because the odds
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  are The odds grow that
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  you're gonna make money in the market the longer you have it in there. And I read this article the
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  other day, it said if you, the odds of making money in the market over a
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  20-year period are 100%. 100%, statistically, all
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  right? Number 10, the last one, the last investing mistake
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  people make is never starting. because
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  they get so scared of losing money. They don't even do anything with
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  their money. And of course, their money doesn't grow beyond inflation and the value
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  of their money falls over time. And before they know it, they're broke at
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  65 with no assets, no idea. And they're like, oh my God, I can never retire.
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  And if that's how you want to be, then just don't start. But
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  if you want to change that, you just got to start. Start
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  with something. Put the money in and then take it out the next day. Just
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  start somewhere. Start small. People are
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  trying to start so big. I built a multimillion dollar
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  share portfolio. I started with 2,000 bucks. I bought shares in a
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  bank. That was it. I started. And once you start, you
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  then learn more and you learn more and you learn more. We started our network marketing
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  business with 500 bucks and we got one sale. Just start small. Think big
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  but start in baby steps. Start small. Every great big thing
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  was started with one small little step. So not starting
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  is the greatest risk you can take and it's probably the biggest investing
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  mistake people make because by the time they get to 50 and 55 and I see it
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  all the time, they say, I wish I had have started
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  sooner. So if that's not you, you don't want to be that, then
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  I hope you take these lessons on board. and grab our book,
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  Money Buys Happiness, if you wanna learn more about getting yourself financially
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  under control and moving forward. And of course, if you've enjoyed the episode,
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  hit the subscribe button, leave us a question or a comment below
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  on YouTube, or hit the share button, hit the five stars. There's
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  a lot of things to do, there isn't. But do those things for us, appreciate it,
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  send this to someone you love, and this will help them on their journey. And go
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  take action. I'll see you in the next episode of the Money Grows on Trees podcast. Thanks
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  for listening to Money Grows on Trees. If you enjoyed the episode, leave a
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  to us on YouTube so you never miss an episode. And if you're serious about
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  building wealth, make sure to check out the links in the show notes and follow me
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