Please Don’t Do These 7 Things With Your Money Anymore. It’s Stupid

1 — Regretting spending the money

Many of the mistakes you make are not for a lack of knowledge.

Most of the mistakes we make are behavioral mistakes.

Mistakes, where emotions took over, led to stupid decisions.

1. Regretting spending the money

If you have $100 and spend $1, you are not saving money.

Money saved, is money not spent. If you earn $1,000, better to spend $0. Otherwise, you haven’t saved anything at all.

Having regrets about spending money is not a feeling you should worry about.

We don’t want to make decisions that we will have to regret in the future.

Regret is about the emotional pain that comes with a previous decision that was wrong.

We sell investments that have fallen the most (because we don’t want to regret it if they fall)
We keep the investments that were negative (because if we sell, it becomes obvious that we were wrong)

2. Invest (only or a lot) in the USA

The US stock market started in 1792 and is worth over $50 million (total market capitalization).

Don’t put all your eggs in one basket, don’t have only eggs, don’t have only baskets.

There are other stock markets too.

Few of us would think of investing 100% of our money in the Polish stock market, but it is still the same mistake we make when we invest everything in the US.

3. Too much focus on history

In many contexts, you look at history and how investments have performed in the past.

In many cases it is relevant, but you always need to remember that just looking back is like looking in the rearview mirror when driving a car forward. It is not a success.

It is reasonable to look back, but you also need to look forward and stand up.

The data, or a historical result, is not necessarily linked to a future. Read this again and write it down in a notepad.

4. Wanting different things in different savings

Think it is wrong to have the same funds in different types of savings.

That is, you feel it is wrong to have the same fund in both ordinary savings, children’s savings, occupational pension, and premium pension.

However, it is not a problem because you should look at your savings as a whole, rather than which account or type of savings it is.

5. Valuing profit and loss differently

Most of us value profit and loss differently.

We value the feeling and experience of a gain and a loss differently.

The feeling of a $10,000 loss is worse than the feeling of a $10,000 profit. It is as if the feeling of a future victory is more satisfying than the victory itself (if it comes).

We often value a loss up to 3 times worse than a profit.

6. Listening to the media, investment gurus, and newsletters

I subscribe to a few different financial newsletters, even some paid ones, and it is extremely easy to believe that these experts are sitting on the truth.

If these experts were right, as they say, they would have been the richest people in the world.

No one can predict how the economy or the market will go.

7. Log in frequently to your deposit account to see how it is going

Log into your online brokerage on time and off time.

When everything was going well, I logged infrequently, and when it got worse, I barely cared about my account.

Sort of an “ostrich behavior”.

Since the stock market tends to rise about 60% and fall 40% of the time, you could say that the less you log in, the more likely your portfolio is to rise.

If you log in every day, it will be cut off like a gravy train if it is going up or down. Add in that we value a loss about 2.5 times more than a gain and that means that emotionally we will experience it more stressful than the days it goes up.

If you log in every 10 days, it means that the probability is higher than it has gone up than down.

If you log in every 100 days or every 300 days, the probability is even higher of a positive outcome.

It’s also in line with my usual claim of “let the money work in peace, time is the most important factor in both increasing return and decreasing risk”.

The less I log, the fewer opportunities there are for me to accidentally sabotage my portfolio by making irrational mistakes.

CONTRIBUTED BY Paulo A. José

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