By Robert Kiyosaki
The success mindset and the key to being a great investor
As we all know, there are always winners and losers in life and in business. But have you ever stopped to wonder what the difference is between the two? Is it just sheer luck, or is there something else at work?
In my experience, there is a distinct quality that winners have that losers don’t-a certain way of looking at the world. That is not to say that winners don’t lose. Everyone does. But the difference between losers and winners is often the way in which they approach losing. It starts with mindset.
Are you a giant or a worm?
There is a statement that I’ve always liked:
Giants often trip and fall,
But worms don’t, because
All they do is dig and crawl.
The main reason so many people struggle financially isn’t because they aren’t smart or hardworking. It’s because they are afraid of losing. Rather than take a risk to become a giant, and experience the falls that come with the process, they instead choose to stay low to the ground where it’s safe and there’s no risk of falling. They’ve already lost because the fear of losing stops them.
Losers cut their winners and ride their losers
Fear of being a loser affects what people do in strange ways. I have seen people who bought a stock at $20 and then sell their shares at $30 because they were afraid of losing what they had gained. And then they watched the stock go up to $100, split, and go up to $100 again.
Ironically, that same person who bought a stock at $20 will watch it go down to $3 and still hang on, hoping the price will come back up. This is an example of a person being so afraid of losing, or admitting they lost, that they wind up losing big.
Winners cut their losers and ride their winners
Winners do things almost exactly the opposite. Often, the moment they know they took a losing position, i.e., their stock price begins to go down instead of up, they will sell and take their losses. Most are not ashamed to say they took a loss because a winner knows that losing is part of the process of winning. When they find a winner, they will ride it up as far as it can go. The moment they know the free ride is over and the price has peaked, they cut and sell.
The key to being a great investor is to be neutral to winning and losing. Then you don’t have emotionally driven thoughts, such as fear and greed, doing your thinking for you.
Financial education gives confidence
You may be asking, “How do you know when you have a winner, and how do you know when it’s the right time to get off the free ride?”
In my experience, anyone who is a winner financially has a great financial education. They have learned from books, seminars, and coaching. Most importantly is they applied their knowledge and learned from the mistakes they’ve made. Each loss is an opportunity to learn how to gain later on.
If you want to be a winner, you must be able to put emotion aside and you must always be learning about money and how it works. It never stops, but it does get better. With each lesson learned, your confidence grows and your losses don’t sting as much. In fact, sometimes they become welcome and the money lost is worth the lessons learned.
So, if you want to be a winner, invest in yourself with financial education and, most importantly, apply that knowledge.