Beware the bandwagon path to money hell
Hallo there, it’s Ann here.
It’s been about 2 weeks since Threads, the new “Twitter-like” social media platform by Meta debuted.
If you have a business that uses digital marketing, it is hard to not see these “new” social media things some along and wonder… eeekk… should I be jumping onto that.
This email isn’t about Threads - I have no idea what will or won’t come of it.
This is about FOMO (Fear Of Missing Out) and how jumping on the latest “thing” bandwagon in the hope that it’s going to be BIG can be the surest path to a wasted life, broken dreams and money hell.
Just like social media platforms, and digital marketing bright shiny objects - the investing world has its own version of the “latest thing you’ve just gotta be it!”
Marijuana and the CBD surge, AI, biotech, crypto, CBDC… we love the idea that there is this ONE THING that if we just find it and jump on the wave early, it will solve our money problems and take us to our wealth heaven. It’s the modern version of the mythological Knight In Shining Armour that will rescue us.
💣SPOILER ALERT 💣
The investing “ONE THING” does not exist.
Neither does the Knight in Shining Armour!
Wealth, like a successful business, is created by an ecosystem of things
that work together to generate value.
What those things are, which of them you should have in your business or the business called your wealth depends on what you want to achieve, what you already have and how what you have is performing.
First comes the vision - what are you wanting, second comes the plan to bring the vision to life, only then do we add the bits and pieces.
So if you decide to jump on a specific investment “next greatest thing” the point isn’t whether you should or shouldn’t - it’s …
Did you have a plan?
A Plan?
For what?
A plan for when a new investment or technology enters the scene and the wave spreads so quickly, it hits you in the face before you know exactly what it is.
Robo advisors, Robinhood, Meme Stocks, NFT’s, IPO’s, private equity, CBD’s….
If you join or take action just because others are doing it, the consequences can be tremendous.
Mostly tremendously bad.
The money and time you could waste without even knowing it could hold you back from making progress, or worse, put you behind even more.
Over and over I hear horror stories of people who threw way too much at a “new bright thing” and now regret the impact of their bandwagon-leaping ways.
A wealthy life fueled by a powerful portfolio of diversified assets does not come about by randomly thrown together “latest new things”.
You need a plan for moments like these. A plan for your wealth and a plan for how you will decide if a new investment has a place in your portfolio.
I’ll share my plan, and then you can come up with a plan of your own.
Let’s get unstuck.
How do we plan for things we don’t know will come along?
THE STORY
FOMO (fear of missing out) is a real thing, and we can all relate to that feeling of not wanting to get left behind.
In investing specifically, there’s fear around the possibility of missing a chance to become an early adopter, to get into a rising new market and take advantage of an immediate opportunity.
With that said, I wanted to equip you with what I had to learn myself, the hard way — questions to ask yourself that behave as filters.
Decision making frameworks create freedom and your decision making filters for what you invest in and how is a key part of a successful wealth creators frameworks.
Decision filters help you keep focused and stick with your core investing strategy whilst giving you a process to see to evaluate if there is any merit in considering the new shiny object and if there is - where it would fit in your portfolio.
By the way - if you do not yet have your core investment strategy firmly in place in your life - you should not even glance at the bright and shiny things.
Go here to get a free masterclass on being a Savvy Investor. In it I explain what your core investing strategy needs to be.
Decision filters are a set of questions to help you slow down and make great wealthy decisions.
When a new “thing” catches your attention, ask yourself the following:
- If I were to invest in this, how will it contribute to my wealth creation strategy, specifically - if at all?
- If I were to add this to my portfolio, where does it fit in? Which asset class is it? Is it a base of my investment pyramid investment or a top “speculative” investment? And how much will I invest in it?
A hint: Most “bright and shiny” bandwagon things are top of the investment pyramid baubles and you should put no more than 1% of your investable net worth into any one investment.
- If I were to invest in this, what metrics will I use to determine if it is living up to its hype and is worth keeping?
Having a way to evaluate the performance of your investment is crucial. Define clear metrics that will help you determine whether it's meeting your expectations. This way, you won't be left in the dark, wondering if you're making progress or not.
- Could the return I am hoping from this be achieved by other investments I already have and am familiar with?
These questions need honest answers.
Are we just looking at yet another shiny object, hoping this will magically make you lots of money, or is it something that you understand how it can either increase in value or generate income or both at a rate that meets your required investment return?
If we don’t know what to measure, we don’t know whether it’s working or not. By knowing what our core wealth strategy and portfolio design is we can determine if this new thing has any place in that plan. These questions on top of having a plan for our wealth help us determine what is worth investigating further and whether it’s worth our time and our money..
Good.
If you determine that the “new shiny thing” could potentially have a place in your portfolio and could generate the returns you want and need… you then have to ask..
- Is this different from what I am already investing in, and if so, how?
If that’s hard to answer, then you likely won’t experience anything different with the new “thing.”
What needs to change, perhaps, isn’t a new portfolio design or new shiny investments - perhaps it’s you ensuring you are doing the core investing strategy well and looking after what you already have.
When you say yes to something new,you’re also saying no to something else.
Which brings me to my final question…
- If you say yes to this, how long will I give this new investment to perform and what will be your criteria to exit it and at what loss?
It is very easy to get into new things and new investments and hot tips are no different. The challenge comes with knowing how to end things. Knowing when to call it a day and wrap it up - especially if it has lost money - is one of the hardest skills investors need to learn to do . If you are going to add individual stocks and investments into your wealth plan you must know how to deal with “Sunk Cost Fallacy” and have clear exit strategies.
“Failing to plan is planning to fail.”
Alan Lakein
At the end of the day, when faced with investment fads, it is simple:
Do you have a plan?
Does this fit into my plan?
Keep mastering the art of wealthy living and getting your money serving you!
Big love, Ann 🌟
And if you don’t yet have your CORE INVESTING PLAN IN PLACE…
… go here and join me on this investing free masterclass to get it done today.
