The Personal Finance Podcast - The 4 Most Dangerous Financial Traits (Avoid These at All Cost!)

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Starting point is 00:00:56 Find your advisor at IG Private Wealth.com. On this episode of the personal finance podcast, the four most dangerous financial traits. What's up, everybody? Welcome to the personal finance podcast. I'm your host, Andrew founder of mastermoney.co. And today on the personal finance podcast, we're going to be getting into the four most dangerous financial traits. If you guys have any questions, make sure you join the master money newsletter by going to mastermoney.com slash newsletter.

Starting point is 00:01:44 and you can join and ask any questions and respond to any of those newsletters there. And don't forget to follow us on Spotify, Apple Podcasts, or whatever your favorite podcast player is. And if you want to help with the show, consider leaving a five-star rating and review on Apple Podcasts, Spotify, or your favorite podcast player. Now, today we're going to be diving into the four most dangerous financial traits that are out there. And I read this fantastic blog post out there by Morgan Howser, who is the author of the Psychological, of money, who was talking through some dangerous financial traits. And these are the ones that really stand out that I think are absolutely incredible for most of us to watch out for. And they are traits that we need to make sure that we avoid at all costs because you can lose a lot of money

Starting point is 00:02:29 if you actually have these financial traits and you act on these financial traits. See, one of the things I want people to understand is to be successful with money. A lot of times you need to learn from other people's mistakes. They do not have to be your mistakes, but you can learn from others' mistakes. And Warren Buffett talks about this all the time, where he has seen so many bankers and so many hedge fund managers and so many folks in finance make a tremendous amount of mistakes by taking on too much risk or thinking they know it all. And what happens is they get themselves into a really bad financial situation. And so today, this episode is going to teach you basically how to keep yourself out of bad financial situations so that you can keep the path

Starting point is 00:03:10 going forward of building wealth. The last thing you want to do is add additional. risk and or put that liability or burden on your family. And so today we're going to dive into these four financial traits. So this is going to be an action-packed episode. Really excited for you guys to hear this one. So without further ado, let's get into it. All right. So number one is FOMO or fear of missing out. Now, FOMO is a big thing that I think a lot of people go through in life in a bunch of different situations. And FOMO is actually a dangerous trait pretty much in any situation in life. You need to fight against FOMO as much as you possibly can. Because often what FOMO does is it causes people to make impulse decisions that are not aligned with their financial

Starting point is 00:03:53 goals and or risk tolerance. So this is really important to note when you start to feel FOMO in your own financial life, that you start to suppress that feeling. I cannot stress this enough. I have done this. It is a very natural human tendency to start to have FOMO. And to various situations. Here's a great example. And we'll start off with this example before we dive into why FOMO can jeopardize your finances. Right now, at the time I'm recording this, Bitcoin is teetering and it probably is there by now at $100,000. The price of one Bitcoin is $100,000. Just a couple of years ago, you could buy Bitcoin for $20,000. And at one point in time, it was even less than that. So this is something where now, since it's hit $100,000, a lot of people are going to be

Starting point is 00:04:40 like, oh, I need to get in there. They feel FOMO and they're going to make impulse decisions to start to drive the price up of Bitcoin. Now, why do Bitcoin rise to $100,000? There's a bunch of different reasons. But one of them is because the President of Elect Trump has stated that he is pro-croped cryptocurrency. So a lot of people have stated they're going to back this up. Secondly, is institutions have started to back Bitcoin, meaning BlackRock and some of the big hedge funds are now all backing cryptocurrency. And so because of this, the price is rising. And a lot of institutions are buying up a lot of Bitcoin, and it is something that a lot of people are going to feel FOMO about. But here's the situation, is that what FOMO does is number one, it causes you to

Starting point is 00:05:19 chase trends without due diligence. The number one thing you do not want to do is invest your hard earned dollars into something that you have not done due diligence on, meaning you need to figure out why you like some specific asset that you're going to invest in. You need to figure out what the financials are within that specific asset, which is one reason why I'm not a huge crypto fan, is because there's just no financial statements backing it or things like that. Now, could you have amazing returns? Absolutely, you could have amazing returns. But I need to know why I'm investing in it. And one of the reasons I don't invest a ton in it is because I don't know why I'm investing in it. Number two is FOMO causes you to ignore your personal financial goals. You set up goals in place. And when you

Starting point is 00:05:58 have those goals in place, you want to make sure that you are following your plan. Well, FOMO can steer you away from your plan. And it is really, really important to suppress that urge. All of us have had that thought to say, hey, I'm going to start day trading. I'm going to go start buying penny stocks. Here's a great example for me is I used to buy penny stocks. And finally, one day I got this newsletter that came in. I was 18 years old and I invested all the money I had into a penny stock. And this is where I learned to invest real quick. And in one day, my entire net worth, which was like $1,000, my entire net worth just absolutely disappeared. I was still in high school. But that was because I was chasing after the money. I had some FOMO in place. FOMO also causes

Starting point is 00:06:36 people to take on excessive risk. And that's the last thing I want for you is to take on excessive risk. It triggers your emotions. Now, emotions are the enemy in investing. And it causes emotional decision making because all of a sudden you're seeing, hey, this is rising really quickly. I need to get in right now. People who are prone to FOMO also are constantly switching their strategy. Their strategy is not the same. They're not sticking to their plans. They're not sticking to their goals. And this is a very dangerous place to be in when it comes to finance. It's because you're jumping from what hot investment to the next hot investment instead of having one specific plan. What's my plan? I invest in low-cost index funds and ETFs and let it ride into the

Starting point is 00:07:13 moon. I do it over and over and over again. I automate my investments into retirement accounts. And from those retirement accounts, I am planning on growing a tremendous amount of wealth. Once I fully fund those retirement accounts, I invest in a taxable brokerage. Now, in that taxable brokerage, I use those dollars for a number of different things and that taxable brokerage will grow over time. If I see a business that I want to buy and I have Xx dollars past this plan, then I will go out and buy a business. This is my financial plan. I have a very specific order of how I utilize my dollars. Nothing can change or waiver from that plan because I set up the plan and it is going in one direction.

Starting point is 00:07:49 I set up my money goals. I looked at my money goals. I said, okay, let's put a plan together that is going to help us accomplish these money goals. And every single month, I execute that plan. Now, I execute it with automation so that I don't have to rely. on my willpower because once you have to start relying on your willpower when it comes to money, it is going to fail. This is why money on autopilot is being created right now. I'm going to teach

Starting point is 00:08:11 you how to automate your money so you don't have to rely on your willpower. I don't want you relying on your willpower. Your willpower is brittle. It is futile. It is going to fail. You need to instead decide for yourself what your plan is. And master your money goals are course that teaches you how to actually master your money goals. teaches you how to do this, how to put the plan together. so that you can start to do step by step exactly what you want to do. Now, one thing about people with FOMO, too, is that they are never satisfied. And figuring out how much is enough

Starting point is 00:08:42 or figuring out how to become satisfied with your money is a very important life skill. And it is a skill. It is not something that you can just, you know, willy-nilly do really quickly. For most people, you've got to figure out how much your enough number is, and FOMO can really get in the way of that.

Starting point is 00:08:58 And then lastly, is FOMO-driven decisions often result in losses or missed opportunities. And this means that you can lead to a cycle of regret and or self-doubt. And what happens a lot of time is then people say, oh, I got to catch up now. I've messed up in the past, but now I have more FOMO and I got to catch up because I missed out on some years. Maybe you bought too much doge coin. Maybe you got into day trading. Maybe you bought crypto and you bought into Bitcoin at 50,000. It dropped to 20. You sold it at 20 and then it went up to 100. Now you're really kicking yourself. There's all these different reasons why this could happen. but the psychology behind this is all the same. You have an emotional trigger that is saying,

Starting point is 00:09:35 I missed out on something. I need to get in on this. And I don't want you to ever feel that way whatsoever. Now, a lot of people who have FOMO, they do things like this. They invest in hype stocks or cryptocurrencies without even understanding why they do it. They join Get Rich Quick schemes. They try to jump in on the real estate rush without even understanding how to run the numbers or doing their homework. They skip emergency funds and just try to invest right away. They don't have a financial foundation yet and they're just taking money and throwing it left and right. They sports bet. These are some of the things that can happen when you have FOMO and you really need to make sure that you protect yourself against this. You owe it to yourself, you owe it to your future self and you owe it

Starting point is 00:10:12 to your family to make sure that you suppress FOMO. It is one of the most dangerous things that can come into your financial life and if you have a tendency of doing this, you need to work on getting rid of that from your financial life. Here's where FOMO can be positive. FOMO can be positive in a lot of ways where you say to yourself, man, I missed out on my 20s, on making sure that I actually invested my money. So you know what? I'm going to do something about it. And I'm going to train this into a positive. And what I'm going to do with my FOMO is I'm going to build that financial base. I'm going to follow the one-three-six method. I'm going to have six months of emergency funds saved up. I'm going to start investing. I'm going to put some of my automatic contributions towards my

Starting point is 00:10:48 retirement accounts. Then what I'm going to do is I'm going to continue to build wealth and grow my income. This, my friends, is positive FOMO. And this, my friends, is positive FOMO. This is the fomo that you can get behind, but any fomo that leads you to stray from your financial plan and any fomo that is going to make you do something on really quick impulses is not the fomo you want to follow. And so if you can turn your fomo into positive, it is one of the best things that you can possibly do. All right. Number two is demanding certainty when none exists.

Starting point is 00:11:18 So demanding certainty in finance is probably one of the most dangerous things that you can do. Because certainty does not exist anywhere. in finance. And anyone who tells you that it does is a wolf's and sheep's clothing. You do not listen to anybody who says they for certain know what is going to happen in the market. Or they for certain know which direction this stock is going to go. Or they for certain know what is going to happen in the future. There's a lot of crystal ball predictors out there and I want you to avoid them at all cost. But demanding certainty in finance is also dangerous because it leads to decisions that limit growth potential. It can increase costs or create missed opportunities for a lot of people.

Starting point is 00:12:00 So number one is doing something like paralysis by analysis. I did this early on in my real estate career is I wanted to find the perfect rental property before I bought my first property. So guess what I did? I did a ton of research. I spent three years just learning how to invest in rental properties without ever buying my first rental. This is analysis by paralysis because I was trying to find the certain home run deal, which does not exist. And so I was trying to find that perfect deal and I was trying to demand certainty. So what happens is for three years, I just decided instead to research, research, research. And guess what happened? I learned so much more from buying my first property than I ever would have from researching for another 10 years if I needed to.

Starting point is 00:12:44 You learn by doing in a lot of situations. You need to do your research up front. You need to understand how things work. And once you understand how things work, it's time to actually get your hands dirty. Nothing is perfect. Nothing is certain. Number two is people will miss market growth potential because they demand certainty. So markets are inherently uncertain. You don't know what's going to happen day to day, week to week, month to month. Where the certainty starts to rise is with time. For example, the S&P 500, over the course of a 20-year time frame, if you invested in the S&P 500, you would at least make money 100% of the time historically. That could change really. quickly. It's not certain that that's going to happen, but historically, the statistics show that

Starting point is 00:13:23 100% of the time you will make money if you invest in the S&P 500 over the course of a 20-year time of spring. It doesn't matter when it happened. When you started, it doesn't matter. And so people who demand certainty can miss growth potential if they are super worried and stress of what's going to happen to their money day-to-day week-to-week month to month. And then also, number three, is this leads to overly conservative investments if you demand certainty, meaning that there are people out there that I have talked to who said, I just don't want to risk my money in the market. I'm just going to put it in a savings account. Or I just don't want to risk my money in the market. So I'm going to put it in just bonds only. Well, you are really hurting your returns over time and how much

Starting point is 00:13:59 money and growth you can have by doing something like that. Now, if that's your risk tolerance, if it's going to keep you up all night to have those dollars invested, more power to you, it's just really difficult to retire that way. Or even worse, the people out there who will not invest a single dollar, they don't even trust in banks. Instead, they stuff their money in a mattress like a drug dealer. All of these are folks who need to have certainty who are demanding certainty when none exists. It is really difficult to kind of go through that process when you demand certainty. Also, people who need certainty have increased costs or they frequently adjust their portfolio because they are chasing assets that they think are safe. This is another dangerous game to

Starting point is 00:14:35 play. You need to follow your plan. A lot of times these folks also fail for guaranteed or low-risk schemes. So there are schemes out there just like the get-rich-quick schemes that are the opposite. They have guaranteed risks or are low-risk schemes. The life insurance industry is taking advantage of this left and right. One of the biggest battles I'm having right now is with the whole life insurance policies. I cannot believe that they are still coming back with infinite banking and saying that this is a way to invest your money. It is not.

Starting point is 00:15:03 The only life insurance you should have is term life insurance because it's low cost and it actually does what it's supposed to do. And so when this happens, people are falling for these low-risk schemes, which is absolutely one of the most frustrating things you can see as someone who just wants to help people build wealth. Now, one thing about people who demand certainty also is they are hindering their financial literacy and learning. And I think this is something that is really important to note because they are not as

Starting point is 00:15:28 open to new ideas as other people would be. In addition, they have a very hard time handling market volatility. So if you invest your dollars and you put your dollars into the market, the market is going to move up and it's going to move down in the short term. Over the course of a day, it's going to move like crazy. Over the course of the week, it's going to move like crazy. over a course of a month, it could move like crazy. Over the course of a year, it gets a little more steady. Over the course of five years, it gets pretty steady. Over the course of a decade, you're going to see a trend of a one direction in which is going.

Starting point is 00:15:57 And over the course of a lifetime, you're going to see that market move in one direction historically. So if you're someone out there who just cannot handle volatility, if you're listening to this podcast and you're like trying to figure out a way to get past this, what I want you to do is I talk about this all the time, but take out your phone and go to your stock market app and pull that stock market out to the longest, time horizon you can. You might have to turn your phone sideways to see how far this thing can go and go to the longest time horizon. In what direction does that market go over the long term? It goes up and to the right, which means that over the long term, your risk goes way, way down and your certainty actually goes way, way up historically. And so because of this, we can rest assured that at least we are making good decisions as long-term investors. Short-term investors are in uncertain, uncharted waters because the market can ebb and flow day to day, week to week, month to month.

Starting point is 00:16:49 Warren Buffett said it best. In the short run, the stock market is a voting machine, but in the long run, the stock market is a weighing machine. And that is one of my favorite quotes because it shows us how we can really compound and build wealth over time. So we need to make sure that we have that financial education. We understand how this works. We can adapt to changing circumstances.

Starting point is 00:17:09 And we figure out how to reduce our stress and anxiety around money because that's what a lot of people have is they have stress and anxiety around money. So what can happen with this? It can cause paralysis by analysis. It can cause you to have overly conservative investments. You can miss growth market potential. It increased costs from adjustments when you're jumping around left to right. You fall for guaranteed or low risk schemes.

Starting point is 00:17:28 And you can underestimate the role of risk in returns. You hate volatility. You have difficulty adapting to change and you have increased stress and anxiety because of this. So listen, if you feel these things, what I can say to you is, demanding certainty means that you don't have enough of a financial education yet. What I want you to do is continue to try to develop your financial education because the more you understand and the more you know, you can suppress these emotions. At first, when I first started investing, the market would move day to day, week to meet month to month, and I would get stressed out.

Starting point is 00:17:57 I'd be like, what the heck is going on? But the more I read and the more I spent time on my financial education, all that became so much easier because now I know this is how this thing rolls, my friend. This is how it goes. And so when the market is ebbing and flowing, when the market is going up and down, when there is high volatility, I am probably the coolest cucumber you will ever see. And the reason for that is because of my financial education. I understand how this works now. And so I want the same for you. So continuing to listen to podcasts, continuing to read books, continuing to take courses,

Starting point is 00:18:28 continuing your education and finance is going to help you tremendously when all this stuff happens. So demanding certainty is number two. Let's jump into number three after this break. Number three, I remember when I needed to hire someone. fast, but finding the right person quickly felt impossible. And if you've ever been there, you know how stressful this can be. That's where Indeed comes in. When it comes to hiring, Indeed is all you need. Instead of struggling to get your job post noticed, Indeed's sponsor jobs help you stand out and hire faster. Your post jumps up to the top of the page, making sure

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Starting point is 00:21:53 since probably the very first episode, I have been saying to you, patience is one of the most important things you need to build wealth. It is the number one attribute you need to build wealth. Most people want to get rich quickly. That is not a strategy. But the way to build wealth is to take money, and invest it, and over time that money is going to compound into large amounts of money.

Starting point is 00:22:15 It doesn't even matter if you have small amounts of money that you're investing. You can take small amounts of money over time, compounded, and it will grow to very large amounts of money. And impatience is very dangerous. Like FOMO, impatience is something that can be even more dangerous to your financial situation. Let's see why. Number one is that you have an increased likelihood of investing in high risk investments because you want that result very quickly. High risk investments are going to try to promise that you will get that result very quickly. And so if you are impatient, you probably are going to trade into things like day trading or cryptocurrencies or very high risk investments.

Starting point is 00:22:53 Number two is you're going to have frequent buying and selling and high turnover. High turnover is not the way to build wealth long term. High turnover, if you are buying and selling and day trading in and out, that is not the way to build wealth long term. You're going to generate more transaction costs. You're going to generate more taxes in your financial. financial situation. Fees are going to chip away at your returns. Studies show that buy and hold strategies outperform day trading, which is driven by impatience. Number three is that if you are

Starting point is 00:23:21 impatient, you will interrupt compound interest unnecessarily. And that is the one thing that I definitely do not want you to do. Charlie Munger, who is Warren Buffett's business partner, said, never interrupt compound interest unnecessarily, meaning that you're going to invest money in your 401k and you're going to pull it out because you're impatient and you want to take advantage of some business opportunity. Compound interest rewards patient people and cashing out early sacrifices that potential growth. Do not cash out early. Now, impatient people also want instant gratification. So a lot of them will have debt because they want that instant gratification. They want to buy the thing before they have the cash. They want to take the vacation before they have the cash on hand. Or they want to take their

Starting point is 00:23:59 kids at Disney World before they have the cash on hand. Or they want to buy the Christmas presents before they save the cash. All of this is really important to make sure that you avoid at all costs because in patience wants instant gratification. If you start to feel this feeling and all of us get on this role where you're like getting on this instant gratification role where you buy something and you're like, I'm going to buy more. And then you buy another thing. And then you buy another thing. You can get down this rabbit hole in this role of where you're spending too much money. And the psychology behind this is you want instant gratification. And so making sure that you can control that is imperative. Also, people who get emotional, and this is the worst one,

Starting point is 00:24:33 is they panic sell during market volatility. So the market goes down and they panic sell their investments because they don't know what's going on. I had so many people who have told me who were there during 2008, 2009 financial crisis, that they sold their investments at the lowest point of the market. And the reason for this is because they didn't know what else to do. They were impatient. They didn't want to wait for the market to come back. Instead, they sold their investments.

Starting point is 00:24:56 Now, if you have a financial education, what's going to happen is when the market goes down, all of a sudden you say, hey, my friend, stocks are on sale. I want to buy more of this stuff because now I'm getting it at a very good price, at a discounted price. What impatient people do is they will sell because they have no idea what else to do. And they panic because they have no financial plan. And so learning to suppress your emotions is so important. And number six, leads right into it.

Starting point is 00:25:21 They have difficulty of sticking to a long-term financial plan because they are impatient. They don't want to wait for a very long time. And so instead, they have difficulty sticking to that long-term plan. They also have a tendency to dip into savings and retirement prematurely. A lot of times they don't have savings or retirement. They're into debt because they are impatient. And so patience is an attribute that you really need in finance if you want to become a big time wealth builder. Now, how do you avoid financial patience?

Starting point is 00:25:46 That's the big thing because a lot of us are going to have impatience in some way, shape, or form. I still have it. Everybody's going to have some sort of impatience. I would say I'm one of the most patient investors that I know, if not the most patient investor that I know. But some people are not impatient. So one is you need to set clear and realistic goals with timelines. You need to put a time next to those clear and realistic goals. And when you start to feel impatient, I want you to go back to those time horizons and say to yourself,

Starting point is 00:26:12 wait, I said when I put this plan together, it was going to take me 30 years to build up this million dollar Roth IRA. So why am I getting impatient and saying to myself, this isn't working? I've had this for three years and it's worth $25,000. I need to be more patient. The plan says that it's going to take 30 years. And you set these clear and realistic goals with timeline. Two, you need to learn how to follow a long-term investment strategy.

Starting point is 00:26:35 If you have never read the book, The Simple Path to Wealth yet, I highly encourage you to do that. It's one of my favorite books for people who are really impatient because it shows you the simple path to wealth is buying investments over time and just holding them slowly over time. It shows you how to get to financial independence and the easiest path to get there. You need to follow a long-term investment strategy if you want to become a patient investor. Three is you need to practice delayed gratification in every single part of your life. So if you're a person who is an impulse spender, maybe you're in some debt and you're an impulse spender before you buy anything outside of essentials, make sure you have a 30-day waiting

Starting point is 00:27:11 period. Practice that now. Making sure you have that 30-day waiting period can delay that instant gratification that you are so longing for. Four is to automate your investments and just stop looking at them so much. Because if you can start to automate your investments, it'll remove you out of the equation. It'll remove your impatient out of the equation. Man, oh man, you see how this is just going to turn every single one of these emotions out if you automate? And so it removes that impatient out of the equation. And instead, your dollars are just working for you and they're compounding over time without you getting in the way and muddling up the waters. Five is you can focus more on milestones rather than immediate results, meaning that I want you to focus on the

Starting point is 00:27:50 milestones that you're hitting and when you hit those rather than trying to focus on getting these immediate results. So when you break down these big goals into small chunks, look at those small chunks and put those milestones together. Now you can have that instant gratification of those small chunks. Hey, man, I just invested my first thousand dollars. I just got to $10,000. I just got to $15,000. And all these milestones are building up every couple of months

Starting point is 00:28:13 where you're getting that instant gratification feeling without having to day trade or feel those emotions day in and day out. Always. Now, if you're a really impatient person, if you feel this all the time, please check your portfolio less. I know that sounds counterintuitive for some people. I hardly ever check my portfolio.

Starting point is 00:28:30 I check my automations to make sure they are working. I don't check my portfolio a lot. Why? Because I know what my plan is, and my plan is a very long-term plan over a very long-term time horizon. I'm not going to mess that up and interrupt it in any way, shape, or form. So I don't check it a lot. I check out a couple of times a year just to make sure everything is working properly.

Starting point is 00:28:48 And that's about it. I don't need to check it. And I live and breathe this stuff, and I don't check it a lot. And so if that's you, limit checking your portfolio for performance. Now, if you're still doing all this stuff and you're really bad with this, this is where I think you need to get some help. You need to go talk to either a certified financial planner, and they will put the plan together and then you can bounce ideas off each other. Then you can start to discuss through decisions and while you're making some of those decisions and that's something you definitely would need.

Starting point is 00:29:13 It would save you a lot of money by doing something like that. So impatience is the third dangerous financial trade. Now, let's get into the last one next. All right, the last one has become much more prevalent over the course of the last couple of years. And this is because there's a lot of social media misinformation out there, really bad advice out there on places like TikTok, Instagram, YouTube Schwartz. There's all these people that are coming in and taking advantage of people who have this terrible financial trait, which is goalability. And the last thing I want for most of you is I want you to take anybody who you find on social media, including myself at face value. You want to make sure that you are doing your own research in every single thing that you do. This is what I did left

Starting point is 00:29:56 and right early on, is people would come with information. And after I lost all my money with those penny stocks when I was 18 years old, I didn't trust anybody anymore. And so what I did is I would read books and then I would do research on the information, come back and look at it at a bunch of different angles and say to myself, how do I feel about this? And really, what does the data show and what is the research show in terms of what returns are for specific investments? So what I did was for example, when I lost all the money in penny stocks, I said, what am I going to do next? So I started to look into Warren Buffett. And I started to read everything I could about Warren Buffett. And I noticed, okay, Warren Buffett is a value investor. He invest in value of stocks. Can I do this?

Starting point is 00:30:34 So I started to dig deeper and started to find out things about value stock investing, started to test it out a little bit and see if I liked it. I realized I don't want to read financial reports all day long. And so this is not for me. So then I looked at dividend investing. And I said, hey, do I want to be a dividend growth investor? And I read the single best investment, which is by far the best dividend growth book. And I went through all the processes. And I looked at it and I said, hey, this isn't exactly what I want. Then I found index investing.

Starting point is 00:30:58 And index investing is the way that I went. And obviously it is the easiest path to wealth, but it also has the highest returns for wealth for the average investor. And so this is something where I loved the combination of that. I looked back at the data. I looked at the S&P 500. You can literally go look at the data. You can literally go into the S&P 500 and see what are the returns over time.

Starting point is 00:31:16 That's all you're investing in is the index. And so you can see this very clear. clearly, and that was making my decision very, very easy by doing research. And so what I want you to do is avoid gullibility at all costs and falling for investment schemes that are out there because they are left and right. Like I talked about earlier, the life insurance people, not a good investment. The crypto people. It has shown a lot of people from the crypto industry have gone to jail. And it is not a bad industry whatsoever. I have no problem with Bitcoin, but I don't think it should be your whole portfolio. And I don't think it should be a massive part of your portfolio either. And so for me, I want you to think through some of this stuff and not just fall prey. and be gullible. I've had a lot of people say to me, oh, if so and so becomes elected, the market is going to do this is what everybody is saying. Or if the other person is elected, the market is going to do this. That, my friends, is something that zero people know exactly what's going to happen. It is a crystal ball situation. Do not be gullible to people saying things like that. Nobody knows what's going to happen. And so what I want you to learn is I need to check the references. So what people

Starting point is 00:32:15 who are gullible do is, one, they fall for investment scamps. So if it's a too good be true a scam, promising guaranteed returns to your wealth, it is probably not true. Two, is they believe hot tips or insider information. There is no insider information outside of the illegal kind. If some guy at the water cooler tells you, hey, I got a hot tip on this new stock and you listen to them, that's a portion of gullibility. Number three, is buying into high fee pitched products by advisors or salespeople. Do not let advisors push you into high fee products, do your own research, and really, you know that fees will absolutely kill your wealth. We've talked about that a ton of times in this podcast. Four is they fall victim to market timing and get rich quick schemes. Don't try to

Starting point is 00:32:54 time the market. Nobody can time the market. In fact, 90% of professional investors do not outperform the S&P 500. And of the 10% that do, they are not the same year in and year out. So why do you think that you can't? It is really important to make sure that you're not misled. Do not be misled by any financial information whatsoever. Do not succumb to pressure tactics. And please do not overlook financial red flags. All of these are keys that you need to make sure that you have. So, one, how do you combat against this? You need to develop financial literacy. Two, you need to do your own research like I've been talking about.

Starting point is 00:33:25 Three, you need to ask a lot of questions and you need to demand transparency. Not just this fluff around question. Oh, it's the average return for this kind of asset class or this is just the average of what a financial advisor would charge. No, you need to ask a lot of questions. Four is be skeptical of anything that guarantees a high return. Be very, very skeptical. You need to do your own research.

Starting point is 00:33:43 Five is to always check credentials. Use third party reviews. you can research certifications, but look at all this stuff before you make any decisions on what you're doing. Six is always avoid impulse decisions. Impulse decisions are never good in any financial situation. You need to be able to think it through. You need to be able to talk it through with your spouse. You need to be able to take a little bit of time before you make a decision. And one of the best things that you can do is seven, seek unbiased financial advice, meaning seek counsel from somebody. If you know somebody who is wise with their money, seek counsel from them, not wise with their money that it just shows like

Starting point is 00:34:14 they drive a G-wagon around and you think they're rich. I'm talking about. I'm talking about. about a real person who knows what they're talking about. Develop a BS meter, meaning learn to identify common scams and tactics. Have that BS meter going and that red flag meter going. So you know what's going on when you watch TikTok and someone says investing in whole life insurance is the single best investment you can have. Look into it further. And then regularly review and reflect on your financial decisions. Why did you do that? And master your money goals in our course, we teach you how to do that, how to reflect on your financial decisions and why you did some of this stuff. And so this is something that I think most of you need to think about these four most dangerous financial

Starting point is 00:34:51 traits that we just talked about. And you need to protect yourself against these. Now, the reason why we did this episode is I want you to identify and see that these can happen in your life. These can happen to anybody including me. These four things can happen in your life. You need to identify those before they get bigger and worsen your financial life. That's the last thing we want is for you to have these emotions take over. So really, to combat this is to control your emotions, learn to control your emotions and how do you do that by continuing your financial education. That is why it is so important to have this financial education and continue it over time so that you know what is going on in the world and you know how to handle specific situations as they come up. Listen, thank you guys

Starting point is 00:35:29 so much for listening to this episode. I cannot thank you guys enough for being here. I hope you got value out of this episode. If there's an episode you want us to do, please send us an email by joining the Mastermoney newsletter and going to mastermoney.co slash newsletter and respond to any of those newsletters out there, and we will help you in any which way that we can. I truly value each and every single one of you. Thank you so much for being here, and we will see you on the next episode. Rosen lasagna, medium power, 15 minutes. Sounds like Ojo time. Let's play. Feel the fun with Play Ojo, the online casino with all the latest slot and live casino games. What you win is yours to keep with no wagering requirements, instant payouts, and no minimum withdraws. Hey, I just won. Woo-hoo.

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The Personal Finance Podcast - The 4 Most Dangerous Financial Traits (Avoid These at All Cost!)

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