Be Less Human
If you want to be a better investor… Be less human.
What This Means
One of the biggest mistakes investors make has nothing to do with picking the wrong investment. It comes from letting emotions drive their decisions.
When markets are rising, people feel confident and want to invest more. When markets fall, that confidence disappears, and many people hesitate or stop investing altogether. Ironically, those emotional decisions often lead investors to do the exact opposite of what they should.
That’s why I’m such a believer in having a system.
Instead of trying to figure out the “perfect” time to invest, decide on an amount that fits comfortably into your budget and invest it consistently. Every month. Every paycheck. Whatever schedule works for you.
This approach removes one of the biggest obstacles to long-term investing: yourself.
Some months you’ll invest when prices are high. Other months you’ll invest after the market has fallen. Over time, you’ll naturally buy shares at a variety of prices without having to predict what the market will do next.
The goal isn’t to be smarter than everyone else. The goal is to be more disciplined.
Successful investing is surprisingly boring. It isn’t about constantly making decisions or reacting to headlines. It’s about building a process you can stick with through good markets, bad markets, and everything in between.
The investors who tend to have the best long-term results aren’t necessarily the ones with the highest IQs or the most complicated strategies. They’re often the ones who consistently follow a simple plan year after year.
Build the system. Automate it if possible. Then let time do the heavy lifting.
Common Questions
What’s more important: picking the right investment or staying consistent?
Both matter. But over the long run, consistency is what separates successful investors from everyone else.
What about dollar-cost averaging?
Dollar-cost averaging is one of my favorite long-term investing strategies. Instead of worrying about when to invest, you simply invest the same amount on a regular schedule. Over your investing lifetime, those consistent purchases help you build a good average cost without trying to time the market.
What’s the biggest advantage of having an investment system?
What should I do with my excess cash?
Remember This:
Consistency beats predictions.