How Would Coldplay Sing for Your Mistakes in Money Management?

It's not uncommon for people to feel lost or melancholic when managing money and building wealth. Money can be complex and challenging, and many individuals struggle with financial decisions and long-term planning. It's important to acknowledge and reflect on these emotions, but it's also crucial to approach personal finance with a practical mindset. Building wealth and managing money effectively requires knowledge, planning, and discipline. Seeking financial education, setting clear goals, and developing healthy financial habits can help you gain control and direction in your financial journey.

Remember that everyone's path to financial well-being is unique, and it's essential to focus on your progress rather than comparing yourself to fictional characters or external references. Connecting to the melancholic themes in sad British pop music or identifying with characters like Tom from the film "(500) Days of Summer" can add to longing or nostalgia.

Light, or train, at the end of the tunnel?

The financial markets are dazzling, and anyone can get caught up. There are moments when you never know what will happen next! Although many of us resent uncertainty, it is a puzzle everyone wants to solve.

In my years as a trader/investment advisor in global banks, I've seen many things that finance professionals and retail investors could have improved.

As I've delved into behavioural finance as a nerd, I've realised that investor profiles can be broken down into three buckets: The risk-takers, the prudent and the cautious.

Rollercoaster riders

Risk takers are a bunch of adrenaline junkies who like to play with their money.

Short-term market movements are a rollercoaster ride, and many of us get caught up in false hopes, wishful thinking, or wanting a piece of the action. You must be on top of your game and stay ahead of the markets to make money. That is a tough job to do daily. On the one hand, you have to keep your emotions in the face of market volatility. On the other hand, the information asymmetry in the financial markets makes it much more challenging to succeed. And here comes Coldplay singing, The Hardest Part.

Benjamin Graham, the father of value investing, gave much good money management advice in his book Intelligent Investor. One of my favourites is "People who invest make money for themselves; people who speculate make money for their brokers." Believe it or not, +80% of retail investors lose money in the short-term markets. It is a zero-sum game; this is how financial institutions profit from you.

Scared cats

The cautious bunch are the ones who are most afraid of investing, either because of their hard-earned money or because of some old mistakes that bring back all the anxiety of money management. They avoid taking risks and leave most of their money in savings accounts, which is the worst thing you can do because savings accounts never protect you against inflation. Building wealth is a long game. Suppose you avoid short-term volatility and invest wisely with a diversified portfolio. In that case, you'll enjoy the compounding effect of investing and get on the Financial Freedom Early Retirement (FIRE) wagon faster.

Being risk-averse is not necessarily bad; being cautious can help you make prudent decisions for your money. But being too afraid of risk can mean taking advantage of opportunities to grow your wealth. Famed investor and writer Robert Kiyosaki wisely said in his book Rich Dad Poor Dad, "Don't let the fear of losing be greater than the excitement of winning." After all, money management is not a matter of life and death.

I can feel Coldplay playing now, Fix You and saying out loud.

Don’t hate the player

I love the prudent ones. I wish everyone felt the same way about money management. The world would be a much easier place to teach about finance and investing and filled with great investors like Warren Buffett. Stay away from the white noise and invest your money with a long-term vision in a well-diversified portfolio. Of course, keep some of your money in an emergency fund, but don't let your money sleep. Money doesn't like to sleep.

Two things savvy investors know!

The risk of loss decreases over time

Unsurprisingly, the risk of losing your investment falls over the long term. Nutmeg found that the chance of losing on a randomly selected global stock drops to almost zero after 13 years of holding it. Meanwhile, the probability of a positive return over the same period rises to over 95%. The longer you invest, the less likely you are to lose money. It's as simple as that.

Diversifying can help cushion losses

By investing in a range of diversified markets, you can protect your portfolio from risk. Having a range of investments in different sectors and locations can give you the peace of mind that you're less likely to suffer losses across your portfolio. Take a look at the Harvard Business Review article with alternative investments.

We are building our Wealt Alternatives Marketplace for anyone who wants to invest directly in private markets investments! Little excited here!

Here to conquer the world?

In hindsight, it is easy to criticise people for how they invest.  Although statistically speaking, most investors are either risk-takers or cautious. We felt the need and built the Wealt platform to help you overcome all the mistakes you make and to give you more clarity and confidence in managing your money.  There is always room for growth.

Invest as Coldplay plays Adventure of a Lifetime, saying, Turn your magic Wealt on. Let us help you to conquer money management together.

Risk warning: As with all investing, your capital is at risk. The value of your portfolio can go down as well as up, and you may get back less than you invest. Past performance is not a reliable indicator of future performance.