7 Psychological Tricks Every Investor Must Know

Investing is an excellent way to build wealth. It’s a way to make your money work for you while you use your time for the things that are most important to you. I mean, how amazing will it be for you to enjoy a dream vacation with your family while still making money? Well, that’s entirely possible with investing. However, only a few investors understand what it takes to be successful so here are 7 psychological tricks I’ve used and many investors use to get ahead when investing!

Trick #1: Risk only what you can afford to lose

The first thing that every investor must know is that investing involves risk and risk simply means that you cannot predict what the outcome of an investment will be. Investors are rewarded according to the amount of risk they are willing to take. In other words, every investor knows there is no assurance that they’re going to get back the money they’ve invested. Therefore, the first psychological trick you must learn as an investor is to risk only what you can afford to lose.

Furthermore, you need to know that investing is not a get-rich-quick scheme. One of the important virtues you need as an investor is patience. However, you may find it difficult to be patient when you’ve invested more than you can afford to lose. That’s when you see investors panicking after a short time because they expect to make money quickly. According to Warren Buffett:

“if you’re not thinking of owning a stock for 10 years, don’t even think of owning it for 10 minutes.”

That is to say, you’re not going to double your money overnight so don’t invest more than you can afford to lose.

Again, you’re more likely to make wrong investing decisions when you invest more than you can afford to lose. List out the top 5 things that you’re worried about right now and I can bet some of them involve money. Money is deeply connected to our emotions, to a deeper degree than most of us could ever imagine. So when you invest more than you can afford to lose, you’re likely going to become worried and make the wrong decisions. For instance, if all you have is $10,000 and you decided to invest it then you wake up the next morning to discover the market is down by 10% and your investment is now worth $9,000…