The #1 reason people fail at investing

As someone who creates a lot of content about investing, I get a ton of comments on that content.

Many people in those comments will complain about how they keep failing at investing.

One of the biggest mistakes I see is what I want to discuss in this email.

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If you invested in VOO (the Vanguard S&P 500 index fund ETF) at the end of 2021… 10 months later in September of 2022 that investment would have lost 25% of its value.

Meaning, if you have invested $1000, it would only be worth $750 10 months later.

Worse, in 2020, the S&P 500 dropped 32% in a single month.

In both of those situations, it felt really bad to be an investor in VOO for a lot of people.

Bitcoin hit an all-time high of $69,000 at the end of 2021. A year later, Bitcoin had dropped 77% and was worth just $15,800 per coin.

Again, in this situation, it felt really bad to be a Bitcoin investor… especially if you bought AT that top price.

This is the problem though.

This is why so many fail at investing.

That’s their entire window and insight into these investments—these little slices of time.

Almost every quality investment can look like a terrible investment if you view the right timeframe.

Here’s the problem: People focus on the short-term performance of an asset and get disappointed or give up.

They buy something at a certain price and a few months or a year later, they might be down 10-40% or more and think this whole investing thing “isn’t for me.”

Then they do what so many do. They sell and give up.

I see it all the time.

Having way too short of a time horizon and then giving up when things don’t go your way is the #1 reason most people fail at investing IMO.

So, how do you avoid this?

I won’t say that it’s as easy as “think long-term.”

And that’s correct. Because it’s not easy, but it is as simple as that.

If you can figure out how to simply think much longer term than you currently do, you will greatly increase your chances of success.

It’s simple. Not easy.

Does it suck that the S&P 500 dropped? Yes.

Doesn’t take away from the fact that if you zoom out 70+ years, you’ll see the S&P 500 has an average return of 10% year over year. Meaning that if you wait long enough, you’ll erase that 25% loss and replace it with a 10% gain each year.

Yes, it sucks that Bitcoin went down 77%.

But if you zoom out you’ll see that even if you bought at the all-time high in the last cycle of $20,000 per coin and you held through it dropping all the way to under $4,000 in 2019… even right now in a bear market, you are up 75% from when you originally bought it.

It is NOT easy to think long-term and trust the process.

However, it IS one of the biggest secrets of investing.

If you invest in quality assets and hold them for long enough, you will have a very high chance of success.

So, practice some patience. Think long-term. Don’t give up. And try to earn some extra money on the side so you can keep investing.

That’s a recipe to increase your odds of success by a huge margin.

Good luck out there.

Andy

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