Any journey in life inevitably involves ups and downs.
Investing isn’t any different.
Below are five challenges you will need to deal with on the way to becoming a truly successful investor.
#1: You Won’t Get Started Early Enough
The personal finance community loves to show you what happens when you start investing at the prime age of 20.
Or the day you get that first job at McDonalds.
Those thought exercises look appealing in theory, but they rarely play out in real life.
Much as we wish things were different, teenagers don’t have that much disposable income, don’t read personal finance blogs, and could care less about retiring at fifty vs sixty years old.
And that’s okay. Sure, we all wish we could go back in time and open that Vanguard account.
But the important thing is what you do NOW, not what you could or should have done in the past.
Didn’t get started at twenty? Twenty-five is an equally great age.
So is thirty, forty, and even later in life.
You may still regret not starting earlier – but you will NEVER regret starting when you did.
#2: You Will Make Mistakes
My first investment was an expensive mutual fund sold by a friendly Edward Jones representative.
My second foray into investing included day trading in the aftermath of the GFC.
Both were terrible moves costing me thousands of dollars. But they also taught me the importance of low fees, a passive approach, and a long-term horizon.
And once I figured those things out, there was no stopping me. I will never again get seduced by individual stocks or fancy active strategies.
Most of us will have a similar experience. At some point, we are bound to make a mistake or two.
That being said, the key to becoming a successful investor is not to do the right things all the time.
It’s simply to do the right things often enough for long enough periods of time.
#3: Your Best Investments Will Feel The Worst
There are times when it feels like an absolute no-brainer to go all-in on the market.
The late 1990s and the stretch between 2019 and 2021 are perfect examples.
I mean, how can you NOT invest when the market is notching up 20% – 30% gains every single year and everyone around you is getting rich?
But the investments that will REALLY move the needle for you are the ones you are making when it feels like the world is falling apart and everyone is losing money hand over fist.
The long and painful aftermath of the dot-com bubble.
The gut-wrenching fallout from the financial crisis.
And yes, the painful post-Covid drawdown we are living through this very moment.
#4: You Will Be On Your Own
Investing is a solitary journey.
The wealth management industry isn’t going to make any money charging you five basis points a year.
Your employer would likely prefer you to be as dependent on that paycheque as possible.
And as far as the government goes – sure, it is kind of incentivized to make sure you can pay your own way through retirement.
But it is also incentivized to keep you from reaching the kind of net worth that gives you access to effective tax-mitigation strategies.
In other words, don’t expect to have too many people cheering you on from the sidelines.
#5: Your Success Will Be Invisible
Others will have big houses, nice cars, and expensive holidays.
You, on the other hand, will have nothing to show for your efforts, or at least nothing nearly as ostentatious.
Thing is, the prize for being a successful investor is unlike anything else in life.
It’s the peace of mind that comes from having secured your financial future.
It’s the ability to leave your nine-to-five behind – for a while, or forever.
And it’s the flexibility and freedom to pursue the things that are important to YOU, not to someone else.
In other words, it’s the ability to live a life that most people can only dream about.
And that, of course, is the biggest prize of all.
As always, thank you for reading – and happy investing.
About Banker On Fire
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Banker On FIRE is an M&A (mergers and acquisitions) investment banker. I am passionate about capital markets, behavioural economics, financial independence, and living the best life possible.
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5 thoughts on “Five Uncomfortable Facts About Investing”
” You can always make more $$$$ but never make more time…..”
Sadly something most people realise way too late
I think there is a correlation between the kind of mindset that causes one to invest early and consistently and to avoid reacting to market volatility that also leads to career success. Not an iron clad principle but that in general, people who handle their own money well also are likely better employees because the discipline and thoughtfulness directed at their personal finances is characteristic of the way they function in life, including at work. That leads to higher pay and even more saving and investment. A virtuous circle. Those five uncomfortable facts felt very familiar to me and I experienced all of them on my way to a slightly early and very happy retirement!
Yes, you are right.
Discipline, a long term perspective, the ability to focus, and delay gratification bode well in many areas of life, not just investing. Work, academics, sports – the list keeps going on
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