August 2022
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August 18, 2022

Financials Matter

"It's Not Just About Finance"

The #1 Mistake to Avoid When Investing

This email should probably be The Top 27 Mistakes to Avoid When Investing but most people wouldn’t read it.

I say that because Human Nature Never Changes.

If I showed you a list of 27 common mistakes investors make, you’d probably agree with most of them.

And you’ve probably made the same mistake more than once.

But I digress.

For now, let’s focus on what I believe is the easiest mistake to correct.  (Yet 99% of investors fail to understand it).

However, once you understand how simple it is, it will put lots of dollars in your pocket.

Ready?

Think in percentages…not in dollars.

Okay, for those who still might be thinking, “HUH?” look at this example.

You buy 100 shares of a stock for $20 (a $2,000 investment).

It goes up to $23.50 ($2,350) and you think, “Big deal…I only made $350 bucks.”

That’s where you’re wrong because a $350 profit on a $2,000 investment is equal to a 17.5% rate of return.

Getting a 17.5% return on your money in one year is an outstanding rate of return.

Ironically, (or Not) when you get that same return in a few months you tend to overlook how well you’ve done with your money.

When I point this out to people, they usually say, “Yeah, but…I don’t want to pay the taxes on my gain.”

Ironically, (or Not) most people with this mind set watch their profits disappear (when the markets go down) and say…” I knew I shoulda taken my profit.”

Then when they start losing money, they dig in their heels and say, “When it gets back to $23.5, I’m selling.”

Ironically, (or NOT) IF it gets back to $23.5, they still don’t sell.

Learning to think in percentages is just one of the many tips we provide you every month in our Short and Sweet Tips column.

See for yourself (HERE).

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