[vc_row][vc_column][vc_column_text]When everything’s going great, people like to take the credit for their good fortune, but when things go south, they start blaming something or someone else. With investing, when people lose money, they like to blame the money and the pursuit of money for their own problems. And they blame the players and actors underlying the money – the market, wall street, financial advisors – for putting them in their precarious financial situation. They blame everybody but themselves.
The truth is money isn’t the problem, it’s just an enabler for the individual’s hidden desires and insecurities. Money doesn’t have greed, it’s the person intensely and selfishly pursuing it that has greed. Investors with this victim mentality put themselves in the position of being paralyzed when it comes time to make wise financial decisions on their own because when you blame others, you have no confidence in your own decision making abilities.
This blame game is just a symptom of the Jekyll and Hyde personality investors assume when investing. There’s the side of investing motivated by greed and there’s the side motivated by fear. Greed motivates you to take on more risk and ignore those risks to find the next big thing – the next Facebook, the next Instagram.
The problem with greed is it also clouds rational behavior. Investors who become consumed by greed ignore the warning signs. They might as well just go to Vegas and bet on black because they’re just gambling at this point. Greed is driving the rise behind Bitcoin because there’s no other logical explanation for its rise.
Bitcoin has no intrinsic value, it’s not tied to any significant economic indicators or factors and it’s unregulated. So how to explain its rise? Simple greed. And the investors fueling Bitcoin’s rise are ignoring the warning signs. And as with other past bubbles fueled by irrational greed like the dot-com and real estate bubbles of the 2000’s, the Bitcoin bubble will also burst.
Investments motivated by greed often ends in disaster and when disaster strikes, the investor blames everybody else and retreats to the other end of the psychological spectrum of investing – fear. Investments fueled by fear can be just as bad as investments fueled by greed.
Whereas greed leads to excessive risk taking and under analysis, fear leads to little to no risk taking and over analysis. Fear leads to stuffing money under the mattress, which is a losing investment strategy. When factoring in inflation, you’re actually losing money when putting the money under the mattress.
So, how to find the happy medium between greed and fear? The first step is to stop blaming others and take responsibility for your own actions. Markets go up and down and trends come and go. That is a universal truth.
You are the final decision-maker, and thus ultimately responsible for any gains or losses in your investments. Sticking to sound investment decisions while controlling your emotions, whether it be greed or fear, and not blindly following the herd is crucial to successful investing and maintaining your long-term strategy. [/vc_column_text][gem_quote style=”4″ no_paddings=”1″]”Never invest in a business you cannot understand.”
Warren Buffett [/gem_quote][vc_column_text]Like Warren Buffett, we gravitate towards productive assets for building wealth, assets that provide a regular income stream independent of their market value. Productive assets like real estate and private investments with regular distributions meet the standard for creating wealth.
For investors not interested in the day to day management of direct real estate investments, investments in a private debt or equity fund allows you reap the returns from investing in real estate while someone else does the work.
And with a private fund, you have access to the executive team, allowing you to ask questions and perform due diligence not available with publicly traded investments. By taking a more proactive role in your investments, you’ll avoid the greed/fear cycle of investing and take more control of your results.[/vc_column_text][/vc_column][/vc_row]