Hey there, Individual Investor!

Investing is crucial for financial independence, but for those with busy schedules, it often feels impossible. The good news? You can achieve success without turning investing into a second job.

Many investors struggle to balance their demanding lives with smart investment strategies. They feel overwhelmed by the abundance of information and the time required to manage their portfolios effectively.

Typical methods like constant market monitoring or sole reliance on advisors are both time-consuming and often ineffective, leading to frustration and slow financial progress.

A New Approach: Adopt These 3 Key Traits

1. Become a strategic planner

Successful investors don’t just react to market changes; they plan.

This means setting clear goals, understanding risk and diversification in your investments.

Set specific goals

Define what financial freedom looks like for you and set clear milestones.

Without a clear goal, how do you know that you’re headed in the right direction. When I first got started, I didn’t have a goal. All I wanted to do was make money.

This lack of focus led to a boom-and-bust cycle of big gains followed by heavy losses.

That’s why with my asset management clients (clients who pay me to manage money for them), we always begin with a strategy session where we clearly define and record their goals.

A good place to start is to determine your financial freedom number. There are several factors that can impact this number like time horizon and investment performance. However, if you’re new to this, here’s a simple formula if you:

Annual Expenses X 25 = Financial Freedom Number

This formula assumes that financial freedom means that passive income from your assets cover your annual expenses. It also assumes that you will withdraw about 4% annually to cover expenses and that your returns are around 8%.

This will generate a conservative number. If you can create larger returns (my program will show you how), then you can really drive down the number.

If I use the formula, my number is: $3,500,000 invested cash assets.

However, If I want to be more accurate, I can use a retirement calculator to factor in my investment performance.

Using the calculator, my number is: $885,000

Understand Your Risk:

Risk is a major factor in investing that should not be ignored.

If you want to be a passive investor and ignore risk, then you will be relegated to inferior results like an 8-10% return on your investment in an S&P 500 index fund.

Additionally, as some of us learned in 2008, your retirement funds could get cut in half forcing you to wait another 10 years before you break even on the loss. A 50% loss requires a 100% gain to break even. That’s right, there are no guarantees in this business. Even a passive investor is subject to black swan events like the COVID crash and regular events like the 22-23 bear market.

You can either ignore, accept it, or understand it and do what you can to mitigate it.

If you really want to outperform, my recommendation is to understand it and mitigate it with systems.

When I invest over $4M in client assets, you better believe I have a system for managing downside risk.

Understand Diversification:

The mainstream definition of “Diversification” is mainly just a hedge for ignorance.

Most “diversify” because it’s what every financial guru parrots as sound investment advice. The truth is most of us don’t fully understand diversification, and admittedly there was a point it time when I didn’t get it either.

For instance, most believe investing in an S&P Index fund is proper diversification or being 80% in stocks and 20% in bonds is also proper diversification.

I have news for you, 3 out of 4 stocks follow the general market indexes so if you’re invested in the stock market, no matter how diversified you think you are you will only remove single stock risk not market risk by “diversifying”.

This is why when I teach diversification and suggest using an index fund (Nasdaq not S&P 500) to do so, it is to remove single stock risk and to promote automatic investment in the best (most innovative companies usually found in the Nasdaq) by allowing the index to rotate them in.

2. Adopt a disciplined behavior

Discipline is key to long-term success. Stick to your investment plan, avoid impulsive decisions, and regularly review your portfolio.

The point of a systematic approach to investing is to automate decision making and remove as much human error as possible. This is impossible if you continuously self-sabotage by committing any number of errors like ignoring the market, getting distracted by noise or shinning objects (day trading), making FOMO purchases, or panic selling.

You must commit to a proven system of investing and have the discipline to follow the rules if you want the results.

Practical Steps:

1. Commit to a system: Choose a system for investing with proven results to master.
2. Automate processes not investments: Make your processes for managing your assets automatic by creating a daily habit of following your system.
3. Ignore Market Noise: Focus on your long-term goals, don’t get distracted and system hop (hopping from one system to the next best thing).

3. Be a continuous learner

The financial market is always evolving. Stay informed to make better decisions. Commit to ongoing education to stay ahead of the curve.

Curious about investing, then learn all you can about it.

A stagnant mind gets left behind.

Practical Steps:

1. Read Regularly: Subscribe to financial news and investment books.
2. Take Courses: Enhance your knowledge with online courses tailored to your interests.
3. Join Communities: Participate in forums and networks to exchange insights and problem solve together.

The Bottom Line

If you’re overwhelmed by investing, begin by adopting these traits.

Set clear goals, make your processes automatic by creating habits, consider taking a course and joining an online investment community.

Over time, your confidence grows, your portfolio will flourish, and you’ll move closer to financial independence without additional stress.