If there is one thing every human being on this planet needs to remember about financial success, it would be the following:
Make rational, calculated decisions, not emotional ones.
This statement can not be overstated. It’s frankly insane how many people let their emotions get in the way of their decision-making. Let’s look at an example, for instance, one might analyze a real estate deal and commit to it, only to realize they forgot to account for an expense. Instead of quitting out of the deal, they decide to go on with it, since they’ve put too much effort to let it go. They’re convinced they’ll make it work. They will undoubtedly lose large sums of money.
The above situation is only one example of emotional decision-making costing an investor dearly. Emotions can influence every form of investing, from buying stocks at their peak to selling at their lowest, or investing in a small business your friend started up, despite the numbers not checking out. Emotions are a biological response to external stimulus, they are never, never a good basis for decision making. Naturally, some emotional decisions may end up going well, but this is the exception, not the rule.
But how do we change our mind, and make the right decision after committing so much?
Well, the answer is simple; set yourself criteria. Do not invest in anything, at all, ever, if it does not exactly fit your criteria. For instance, if a property would return a negative cash flow, and your criteria demand at least an 8% positive cash on cash return on investment (8% of your initial investment in income yearly), do not buy it, despite committing your time to analyzing it, and believing you’ve struck gold.
Criteria are an essential part, analyze investments, and if they fit, great. If they don’t, and you can’t change the parameters of the investment itself, don’t invest in it.
If you’re interested in starting your journey to financial independence and success, I highly recommend picking up Rich Dad Poor Dad, here’s an affiliate link to purchase it on Amazon, you would be supporting me too!
Rich Dad Poor Dad: What the Rich Teach Their Kids About Money That the Poor and Middle Class Do Not!
If you’d want to learn more about achieving goals and fighting a lack of motivation, I highly recommend Grant Cardone’s The 10X rule, please feel free to purchase it using this Amazon affiliate link in order to support me as well!
The 10X Rule: The Only Difference Between Success and Failure