Why Is Money So Damn Hard?

Money is a funny concept – it promises us freedom yet binds us in chains.

The problem is not just earning money, but the complexity that comes with managing it. Our financial well-being hinges on our ability to navigate “personal finance.”

With a decade of investing experience under my belt, I would expect to have it all figured out by now. The truth is, I am merely scratching the surface – that’s the case with the vast majority of us!

And no, professional investors don’t have it all figured out either.

Understanding Money is a Skill

Looking back now, it’s very strange that we are not taught money management in school.

For many of us, it’s a skill acquired through trial and error, often at a high cost.

Before you even get started with making an investment, start treating money management as a critical life skill. Read books, attend workshops, and observe financial mentors (but don’t follow the influencers just selling you their courses…).

As with any skill, practice is the path to proficiency.

The Emotional Weight of Money

Money isn’t just currency; it’s emotional. The fear of loss can paralyze, and the thrill of gain can blind.

Recognize emotions but don’t let them steer your investment ideas. Just because there is hype for a stock “going to the moon” doesn’t mean you should invest in it. Take a step back and make rational decisions before you hand over your hard earned cash.

More often than not, I would have been better off just leaving an investment alone.

Create a plan for your finances that includes safeguards against emotional decision-making, like automatic savings plans and diversified investments.

The Complexity of Choice

With endless investment options, financial products, and retirement plans, choice becomes a burden. Simplify by focusing on the essentials that align with your goals.

Find your risk tolerance and investment strategy. Seek out (appropriate) professional advice to navigate complex financial waters and remember, simplicity often trumps complexity.

I like to set a certain percentage of my portfolio for cash, stocks and cryptos. I even keep a side pot just for trading. Once a year, I re-allocate the portfolio so it stays within my allocation tolerance.

Great year for cryptos? Good, take some profits and stick it into cash or an ETF.

It never hurts to take profits!

Money and Time are Interlinked

Time is a non-renewable resource, yet it’s essential for growing wealth. Understand the power of compound interest and start investing early.

The earlier you invest, the less you have to save to reach the same goal due to the exponential growth over time.

Yes it’s hard to watch the first few years as most of the compounding benefit is in the back end. But if you have a set and forget ETF strategy, you’re golden.

The second rule, don’t lose any capital – even time is not your friend when you’re going backwards.

The Illusion of Quick Success

Many chase get-rich-quick schemes, but wealth is usually built slowly. Avoid the allure of fast money – it’s often a mirage. Instead, invest consistently and wisely, focusing on long-term growth and stability.

Money’s difficulty lies not in its acquisition, but in its mastery. Being in the personal finance space for a while no, I’ve seen many struggle and succeed. The journey to financial wisdom is long, but with the right knowledge and habits, it’s certainly within reach.

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