Everyone wants to invest. But the real question is: Are you willing to invest in yourself?
There are some characteristics that are different when you are an investor versus when you are just investing. Let’s dive into what those are.
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First, let’s break down the difference of the two –
Investing: Perhaps a one time act, or the act of putting capital to work. Once you have invested, you’re done.
Investor: Who you are at the core. It’s not just about the item that you are investing in, but also all about your mindset.
Are you an investor or investing?
I personally look at myself as an investor. I look at what I do in the stock market as just one phase of investing.
The Characteristics of an Investor
1.) Investors are always willing to learn
What we are typically taught in our society is that you go to school for four years, you get your degree, and that’s it.
As an example, let’s say that someone went to school 20 years ago for marketing, and never wanted to learn anything else about it after that. Got their degree, and they were done. But 20 years ago, the internet was just starting out. Google ads didn’t exist – neither did Instagram or YouTube.
But an investor understands that learning is never done. The market is always changing. The vehicle to reach people is always changing. The tactics and strategies change. The core principles may remain the same – but the technology doesn’t. So an investor is willing to KEEP LEARNING.
Real life story…
Growing up, I was raised by a single mom. My dad passed away when I was a toddler. And being raised like that, I knew there were certain disadvantages. And one of them was that I could see my friends gaining financial education from their parents. One of my friend’s dad owned businesses, and he could go to him with business advice. He did not have to go any further than the living room. I didn’t have the same advantage because in my household, there was no one I could talk to about getting involved in the stock market or investing, or even running a business.
And because of that, from a very young age I was always curious and always ready to learn.
Anytime I see someone successfully investing or running their own business, I always ask:
What does this person know that I don’t know?
I want you to think about that as you look at different industries and are looking at people who are already at where you want to be.
Asking that question will fuel the side of your brain that activates the characteristics of an investor – you are always learning.
Instead of thinking, “Why not me.. I deserve that, too!” Think, “What do they know that I don’t know?”
2.) Investors are willing to take on calculated risk for a reward
As humans, we take on risks every day. We get in the car and drive. We get on an airplane and fly. Because the reward is that you will get there faster, you don’t have to walk, you get to go on vacation, etc.
But when it comes to investing, a lot of people for whatever reason get scared about taking risks.
If you are going to be an investor at your core, then you need to be willing to take on calculated risks.
Once I reframed what I thought about risk – it totally changed how I thought about money and changed how I moved forward with the “unknown”.
For example –
I spent about $4,500 on my first stock trading course back in the day. I didn’t have the money at the time, so I put it on my credit card. And I was willing to spend that because again – I knew at an early age, I was not going to receive this information for free and I would have to end up paying for it.
I paused before I paid for it, and I thought, “What if this doesn’t work?”
And then I thought, “But what if it DOES work?”
Look at the absolute worst case scenario and ask yourself if you can live with that.
So for me in buying that course, the worst case scenario was spending $4,500. “If they’re charging that much money, there has to be at least something I can learn from it.” If I didn’t learn a thing, at least I would know what a $4,500 scam looked like.
I moved forward regardless, and the positive from that was that I would never get scammed out of $4,500 again.
That carried over into trading.
Because my first trade cost me $500. And when I invested in that trade I thought, “Do I need this $500 to pay my rent? My bills?” No. So the worst case scenario was that I would learn a lesson and get better.
Are you willing to take calculated risk?
Or are you stuck not wanting to pay not even $200 bucks for a course? Because while you’re sitting on the sidelines thinking about it, you could have taken action and started learning from it, no matter what the result it. You either learn from the course, or know what a $200 bad course looks like.
3.) In the event of a loss, investors look for the lesson learned
Most people look at a loss and think: “I shouldn’t have done that. I don’t know what I’m doing! I knew I wasn’t smart enough.”
Do you think that Ford, GM, Microsoft have ever invested in a bad product that never made it to production? Do you think they said, “WELP, I guess we should shut the company down and stop doing what we are doing.”
NO! They took the lesson, learned from it, and now know what a bad product looks like.
Investors do not look at a loss as a sign that this isn’t something they shouldn’t be doing.
Investors look at loss as a sign that they need more education, that it may be more difficult than they thought, or learn what not to do next time.
Failure is simply the opportunity to begin again, this time more intelligently – Henry Ford
So when you fail, it doesn’t mean stop. It means you can start again with knowledge that you didn’t have before.
4.) Investors have the long-term vision in their mind
When you are an investor and take calculated steps, anything short of the goal is just a stepping-stone on your way to get there.
If you were to sit Warren Buffet down and ask him how he became successful, do you think he would respond with: “The first stock I invested in went nothing but up and I have never lost any money. That’s it. I’ve never been criticized as an investor.”
No! He probably has tons of bad companies that he has bought in the past.
BUT he drew a line in the sand and said “I am going to be an investor no matter what”, so whether he bought a bad trade or not did not stop him from moving forward.
If you bought a house and after found out the roof was leaky and needed some work, would you give up on buying a house again and never do it again in the future?
Most companies and investors did not become successful on their first try or investment.
There’s no TESTIMONY without any TEST
What is going to determine if you will be successful or not is what you do when the tests come.
Is your testimony going to be: “I was met with adversity, but I kept going. I went to the drawing board and learned from it and tried again, and had to do that a few times. But then I took off with success after time #3”?
If you are going to be a millionaire, for example, and commit to that goal, what do you think you need to do on the way? Do you need to make $100,000? $200,000? Yes. Anything less than a million dollars just means you need more training and coaching, might need to switch up tactics, etc.
Anything short of the goal is just a stepping-stone to get there.
Tips to help you get there
When I started out I used to think, “How will I get my dream house? My dream car?”
A lot of people use where they are born, the color of their skin, not having any money as excuses to not start.
I could’ve used, “Well I don’t have a dad to teach me these things so I don’t know how to invest”. But you have to keep going, you have to START.
Here are some tips to help you do that:
1.) Live a lifestyle that is below financial red line
This simply means that your bills are lower than what you make. One thing that helped me with this is the 70-30 principle.
I would not accumulate any bills that would go above 70% of what I made in my job. I always needed 30% available to invest.
If you made 50K a year, you have to find a find a way to live a lifestyle where 30% of that you can invest. This is “opportunity cash”.
Don’t live your life up to financial red line.
2.) Factor in time
A lot of people do not factor in time when it comes to investing. If you are completely new to real estate, to the stock market, owning a company… sometimes we are so hard on ourselves.
We think, “If this doesn’t work in 30 days – I’m out!” You think it’s only going to take 30 days to turn that all around?
Factor in time means:
- It takes time to actually learn the craft. You have to factor that in. You can’t get a 4-year degree in 1 year.
So let’s say you agree that it is going to take 1 year to learn how to invest. Does that mean that because you aren’t seeing any reward in that year, that you wasted your time? No!
- Factor in different market conditions
For example in real estate, there was one way to invest before the crash in 2008 and after. Because the market was different! The conditions are even different today.
Same with the stock market. Have you been through a bull market? A market crash? A bear market? A market correction? These are different scenarios that you will have to learn, and sometimes you don’t learn them until that market comes.
3.) Do not come into a new industry and focus on the money
I think this is one of the biggest mistakes that most people make: they come into a new industry and focus on the money.
“How much money can I make?”
The money is always there once you become a professional at the skill.
Is the goal to come into real estate and make a bunch of money OR is it to find undervalued properties that you can fix up and sell?
In the latter, you are focusing on the SKILL. You master that, the money will follow.
In the stock market, the skill is not to log into the stock market and make a bunch of money. What you want to get at mastering is knowing what a good company looks like, and what a bad one looks like. And then how to take advantage of both. The goal is to get good at reading stock charts and to recognize important news that moves the market.
As an investor, you will always ask yourself, “What skill do I need to master to succeed?”
4.) Get Coaching and Mentoring
One of the things that helped me is I always had a budget with mentoring and coaching.
Most people have a budget for a lot of things that don’t actually improve their life from a mindset perspective.
You are going to spend more years living an in retirement than that one day or week you were willing to blow your budget on your wedding or vacation, for example.
But when it comes to getting coaching and education about finances… we don’t have a budget for that.
How much do you pay a year for mentors? People are willing to share their knowledge, but you are asking for their time. And most people don’t have a budget to buy someones time. To buy a course. To go to a conference.
Factor in a budget for learning.
Because then when an incredible opportunity comes up to be educated, you don’t have to weigh it or second guess it – you already have the money for it.
Those are just a few tips I want to pass on to you, and hope they help you in your future.
After breaking all of this down, I want to ask you:
Are you an investor? Or investing?
When you are an investor, you have the characteristics of: always learning, willing to take calculated risks for reward, your mindset is learn lessons behind losses, and you have the longterm version.
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