7 Deadly Mistakes Newbie Investors Make (And How To Avoid Them) | Cynthia Crafter | Skillshare

7 Deadly Mistakes Newbie Investors Make (And How To Avoid Them)

Cynthia Crafter, Personal Finance and Investing Blogger

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11 Lessons (48m)
    • 1. Introduction

      1:18
    • 2. Deadly Mistake #1

      2:29
    • 3. Deadly Mistake #2

      5:24
    • 4. Deadly Mistake #3

      4:05
    • 5. Deadly Mistake #4

      4:33
    • 6. Deadly Mistake #4 Example

      7:56
    • 7. Deadly Mistake #5

      3:23
    • 8. Deadly Mistake #5 Example

      11:17
    • 9. Deadly Mistake #6

      3:12
    • 10. Deadly Mistake #7

      1:30
    • 11. Wrap Up

      2:34

About This Class

This class covers the 7 biggest mistakes that most investors make BEFORE even entering the stock market.  These mistakes can set up you up for failure before you get your portfolio off of the ground.

Identifying and providing solutions to these potential pitfalls will allow you to grow a portfolio that will provide you with long-term growth for years to come.

Doing the necessary prep work, having the right money mindset, and setting realistic expectations will increase your chances of building wealth with stocks.

Many people lose money in the stock market not because they are not smart enough, but because they do not understand what it really takes to be a successful investor.

 

The stock market can be a lucrative marketplace or a scary minefield. Take this class and you will be able to enjoy the former while sidestepping the latter.

Transcripts

1. Introduction: Hi and welcome to my class. The top seven deadly mistakes newbie investors make and how to avoid them. My name is Cynthia Crafter, personal finance and investing blogger. And I'm also a long time retail stock investor. Did you know that most retail investors set themselves up to fail before even making one trade? Yes, this is absolutely true. Failure to do the right prep work or to have the right money mindset can get you eating the line in the market. And you will most definitely end up like this, losing a lot of dollars in a lot of points in this class, I will give you seven actions you must complete before you make your very first train. So if you are ready to take the bull by the horns and make a little money and also sleep soundly at night knowing that you made good, high quality decisions and roll today Ready, set. Go See you in class. 2. Deadly Mistake #1: Okay, you guys, before we get started with the class, I just want to go this disclaimer very quickly as this class does mention websites and stocks as examples for students and investors. However, this is by no means recommendation for star purchases. Each investor is responsible for his own her own independent research and transactions that are performed as a result of that research. If you're in doubt, contact the financial Advisor. I am not a financial advisor. Remember that all investments involved risk and I will not be responsible for those actions . So now, since we've got the disclaimer out of the way, let's move on to the first Atlee mistake. Okay? The first deadly mistake that I see a lot of movie investors make is having outstanding credit card debt. Because not only do you owe a certain amount of money to a person of business or institution 99% of the time, unless you have some teaser 0% interest rate, you are also paying a very high interest rate To borrow this money or to have this line of credit eso you are already in the hole so trying to invest money and make money somewhere else when you're still in the hole is just not a good financial strategy, considering the average stock market return is 7% and the average credit card interest is 15%. Even if you have the average rate of return on your portfolio, you are steel down 8%. Do not kid yourself thinking that you're going to do extremely well in the stock market, and you're going to outperform to 15%. You may or may not, but don't count on it. If you want to become richer or wealthier quicker, then my advice is to pay off the credit card that get rid of the interest. And now you have the money that you would have been paying off interest back in your pocket . So that is your first step. You need to have no credit card debt because it doesn't make any sense, and it is a losing proposition. 3. Deadly Mistake #2: Okay, So the second deadly mistake that I see a lot of new be investors make is no emergency fund . You absolutely, positively need an emergency fund before you start any type of investing. At a very minimum, you need three months to cover all necessary expenses such as mortgage, rent, utilities, food, gas for your car. You should have three months minimum. I would say, If you're a sole breadwinner, you should have at least six. And I think that if you have kids, you should try to strive for nine. Now, that's me being extra cautious. But as I said, you need to have some type of emergency fund. And why is that his wife? Because savings is very different from investments. And I hear people say all the time that their investment account will also serve as their emergency fund. That is a very bad idea because there's a distinct difference between saving and investing with saving. The purpose of saving is short term and safe, so this should be in a savings account, a money market account, and sure enough, it makes no money for you. The interest rates are so low for these accounts, is so minuscule you won't even notice. But the pros with the's accounts is that they are very safe. So the F D. I. C. Is going to guarantee your money is going to be safe and sound. It's going to be there if the roof leaks. You have a medical emergency. Something happens with your kid. Your car breaks down. You can deep right into that account, and that money will be available for you, so you should always have that savings. The difference between saving and investing is that investments should be thought as long term and also subject to risk. And I'm not just talking about the stock market. Any time you make an investment, whether it's the stock market, real estate, a business investments have risk. It is not guaranteed if the business goes belly up. If a real estate deal goes belly up, if you lose money in the stock market, you've just lost it. So is also subject to risk. You have to keep that in mind, so you may look to that account and it may be cut in half for all gone or who knows what what happened to it. But the reason why you are urged to invest after you have a submission. Sufficient amount of savings is because we investments. It should be something that you contribute to, and it grows over time. As with stock market, you want quality. Stocks may be having a decent dividend and the stock price appreciates over time. But that takes time. For all of that. To materialize is not gonna happen overnight. And I know you hear all these stories about day traders making a lot of money and making a killing on Wall Street. Whoa! For every one of those guys, it's Joe Blow on the corner who has lost his whole investment. Made some, um, risky purchases has nothing to show for because he's trying to make a quick buck, and that's really not what we're trying to do here. So the time horizon should be years, Um, that you do not have to touch this fun because you will have a lot of volatility and volatility, and stock market means that you can expect the prices to go up and down. In fact, they go up and down on a daily basis. So for your stock price to increase in value it will take time. Actually, the bare minimum for me is probably 18 months, and that's the bare minimum. But usually I'm looking at something that I can hold at least 3 to 5 years. I know some people hold for 10 years and beyond. Eso is going to kind of I'll have to be up to you. But this is something that you want to grow. So you need to look at this as something that you're not going to touch for years. You're going to be contributing to the account what you're not gonna be taking out of the account. So keep in mind, an investment account is not a savings account. It should not be used for car house repairs or any other emergencies. That's what your savings is for. And you know that you're not going to have to sell some investments and sell it at a bad price and go through all that rigmarole when you should have just had a savings account to take care of these emergency. So if you don't have emergency fund, get that started and to sufficient levels before you look at investing 4. Deadly Mistake #3: OK, moving on to deadly mistake number three and deadly mistake. Number three is no long term view, and this is kind of piggybacking on the previous point I made or the statements that I made with the state number two No emergency fund. You really need to have a long term view when you approach your portfolio. Once again, you hear these stories about people trading in and out making lots of money. That's day trading, swing trading or position trading. It's there. They refer too dependent on the timeline in which you hold the stock. Some traders are in it out within a day or within a couple of days. This is not what we're trying to do here. We're not necessarily trying to trade were trying to invest, and I see trading AZM or is a quick sear, as opposed to when you cook something and you put it in a quiet part. You let it sit there marinade cook slowly and let it get where it needs to be. And that's the way you need to see your investments. And over time you're going to contribute a little bit more and a little bit mawr so your contributions plus the stock appreciation plus the dividend reinvestments. And that's going to start to get bigger and bigger because issuer portfolio gets bigger and the prices appreciate it. You're going to get that nice wealth snowball effect, and that's what you're really trying to achieve. So when you start this investment, you want to say, OK, this is hopefully where is gonna be five years from now or 10 years from now and have long term goals From that perspective, you cannot look at something ah, portfolio or an investment and say, Well, OK, I want to, um, be rich quick at a year is not gonna happen like that. So the solution, of course, is to have a long term perspective. It's not gonna grow overnight. And here's the other thing. You have a little bit of a tax of incentive. You know, the tax code is always changing, but basically, right now it reads like this. If you if you hold a stock more than a year, you get a special, a special rate on the stock. So say if you hold it more than a year, you sell it, you get tax. This special rate which is a lower rate, is called AH capital gains tag. And it's a long term capital gains tax and a special rate, as opposed to If you buy stock and you hold it less than a year, you cash out, then you are taxed at the short term capital gains rate, which is ordinary income. And, you know, um, the tax code is always changing, so that's where it is today. So you also have a tax incentive for doing that as well. But what I want to emphasize here is that you really need to be patient, look out into the distance and say, OK, we'll five years from now, 10 years from now, this is This is where I want it to be. And you really have to have that view. Don't look at it as, um, a nest egg or somewhere where you're going in and out, in and out, because you're going to miss those times when the stock market is going up and then you really gonna want to kick yourself because you're gonna be missing out on all this precious gains. So unless there's a reason for selling the stock and sometimes there there are reasons that you really need to get out of the stock. Um, you just need to hold on to be patient and be disciplined. 5. Deadly Mistake #4: Okay, Now we're gonna talk about daily mistaking them before and dealing with State number four is buying on that hot stock tip. I remember circa early 2000. So I'm kind of dating myself when we would come in in the morning and get coffee and we would hang around the water cooler in the break room in exchange some early morning small talk. And that's when everybody would start talking about the hot start or the hot stock tip that they got or they heard. And unbelievably, people would actually go out and buy purchases based on some tip. They heard by the water cooler about some guy who made a ton of money on the stock. And think about it. You would not buy a home. You would not buy a car or anything major with your heart, her money and not investigated fervor. But for some reason, people do this all the time with stocks. Eso This is a deadly mistake. A lot of new be investors made because once again, their thinking the get rich quick ah, scheme in their minds. And so they're thinking this is gonna be the way I'm gonna be able to retire early in and lounge on the beaches of Florida or whatever they were planning on doing. So this is what I would advise you not to do. Now. You can get ideas from other people, but do not make a major purchasing decision based on it. So the solution is no matter how wonderful it sounds. And no matter how much money somebody said they made, you need to perform due diligence at all times. Let me highlight this. You need to perform due diligence. That means no what you're buying and why you're buying. And you've got to research, research, research. And I cannot hammered at home any harder than I am right now. So it's amazing to me. A lot of times I will hear people say that they bought a particular stock and they have no idea what this company really does. Who's on the management team? What the finances looked like. Is the stock too expensive? Um, what is the history of this star? Where what are the analysts ratings? They know nothing about it, and these things are so important because you really need to know the actual business and the health of the business. For example, if you know it's energy stock, you need to know the pros and cause of being an energy sector. If it's a technology stop, you need to know the pros and cons of being a technology stock because from sector to sector they have certain things that work for and against them is just like right now. Well, if you re cheap so ah, lot of energy stocks are under pressure. Technology stocks we know that was hot. Today may not be hot tomorrow, so you need to keep up with the actual business. You also need to know, is this business mostly domestic or international? Because sometimes geo political events or international events can affect a business here if they do a lot of business abroad. So these are things that you need to know, not Onley that then also, you need to dig in to what we call certain metrics, which falls under a category called Fundamental analysis. But you actually need to look a certain metrics. Look a certain ratios to determine the financial health of the business and of the stock, and you should never buy a stock without doing that. So Now we're going to move on to some of the website that I used to start investigating my stock and finding out a little bit more about the business, and I can't stress enough how important this is. 6. Deadly Mistake #4 Example: okay. And now I'm at one of my favorite sites. This is Yahoo Finance, and this is a great site for finding information about various stocks and other financial information. So I'm at the Apple site, The apple landing page and as you see, is currently trading at 109 79 it's constantly moving because the market is open today. So you're going to see a lot of price fluctuations up here. But this is Thesis Armory landing page. Oh, excuse me. Already on this statistics page, that's what I was going to take you to. So anyway, we'll start with the statistics page. Okay? On statistic page, there's a lot of technical evaluation information on this pace that will help you to researcher stopped to find out a little bit more about it. And I don't want to go too deep in this class. But I do want to highlight some common ratios and metrics that are used to help an individual to, um, actually research and evaluate a stop. So the 1st 1 that Delalic it is these two either to trailing P E or to forward eat P E and P E means price to earnings So in itself, as you can see these numbers over here in its in itself, they don't mean a whole lot. These metrics air used to compare the value of a stock to other stocks in a certain sector . So let me give you an example with Apple. Apple is in the technology sector. So if I wanted to get a good gauge of the value of Apple, I would take the P ratio and compare it to other technology companies. So I would compare it to a Facebook. I'll compared to a googol. How well, compared to a marker Sophos isco Amazon, what I would do is take all those comparisons and see where the P ratio for Apple evolves. That will let me know. Am I paying too much or too little for this particular stock, given the p ratios of all of his peers, So it's used Maura's ah comparison tool. Now the ratio below it is a little bit different. Um, this is the peg ratio, and with the pain ratio, you are trying to determine the price or get the price tag of a particular stop you're trying to figure out. Is it fairly valued. Or is it too expensive, or is it she? So I know it seems like you could look at the stock and say always $20 a share. That's cheap, $100 a share. It's a little bit more expensive, but that's not really how stocks were. You cannot tell the value of a particular stock just by looking at the price the way is done. An investment world is. You look at the paint ratio and the rule of thumb is if it's less than one. This is undervalued if his over one is starting to get overvalued, and if it's one, it's fairly value. So this is going to tell you something about the stock and with Apple is 1.4. So it's slightly overvalued, but really not too much. So that's a pretty good peg ratio. I will also throw in. If you have a negative tag ratio, then that should actually trigger some warning bills, because that means that the company is not even growing because the G and pegs growth price earnings growth. And that means that that company may even be new, or maybe in a little bit of trouble, what I would really try to avoid that Stocks. Now, a couple of the metrics I just want to kind of introduce you to is another one. That's pretty interesting. The short percentage of float. And basically what you're trying to find out is is anybody betting against your stock? Because the short interest of float float means the outstanding shares of stock. So you want to know how many shares out there people are using to bet against the stock? I know it sounds kind of weird, but in the investment world, if you were long a star, you're expecting the price to go up. You're buying it them for the price ago. Look, if you're sure to stop, you're betting that the price will go down. So you're going in reverse. So if you look at Apple, Apple has a short interest of a little 1%. So actually, that's good. Um, the rule of thumb and with sure interests. Excuse me with your interest is I would not want Inish your interests above 2025% because that means now there's getting to be quite a few people who are starting to bet against the stock here you're saying almost 1/4 of the shares are used to bet against the stock. And so this That's not a good thing. They're betting against the stock for some reason. So unless you know what the reason is, and even if you know what the reason is, you probably steer clear and then down here as well. Now it's going to give you a section on the dividends about dividend rate $2.28 the yield 2% and is gonna give you payout ratio in divinity and days. And if you want to know more, and death information about divinity is how they were. I do have a dividend class on skill share that you can look at and take, and it'll get into further or deeper into some of these metrics about dividends. Eso You might want to check that out now the other tab that I want to check out fairly quickly. It's the profile tag in the tab on the profile tab. As you see it has the executive key executives listed and their further down. You have a description of the company, and you would say, Why is this important? This is important because you need to know who runs the company and what the company actually does. I've seen people by start have no idea what the company does. You need to know everything that they do. Sometimes they have different divisions that you need to be aware of because you need to be aware if any news of market conditions or anything that would affect the stock. Also, you need to know the names of the key executives just in case you hear the name and you hear that they're involved in a lawsuit, a county scandal, whatever that could be associated with key executives. They may be leaving or getting fire. This could have I affect on the stock price, depending on whether it is really good news. Really bad news doesn't always mean that it will have that effect, but it could. So you should be familiar enough with the business and with the key executives. So if you hear anything, at least that will signal for you to check. It may be nothing, but you need to be aware of that so you can take action if need be 7. Deadly Mistake #5: Okay, now we're gonna move on to deadly in the estate number five. And it Lee Mistake number five is no exit plan. No, went to sail. You always hear people talk about stocks and win to buy. This is the high stock. Bye bye bye. But you also have to have an exit or contingency plan before you make that first purchase for that stock, you have to know how much you are willing to lose either on a portfolio basis of her stop basis before you cut and run. And yes, I do buy, Do advocate buying and holding for a significant period of time. But you have to look at your portfolio and look at the performance of your individual stocks and determine if this is really worth hanging on to. And you have to give yourself very straight rules. While you're not emotional while you're your money, it's not tied up in the stock. So that's why I say come up with the exit plan before you buy this by the actual stock. So if you're rule is that you can't lose more than 1% of your portfolio and individual stocks when that stock drops to that point, you need to go ahead and sell your position, or you're not going to lose no more than 10% to sell your position and a here to that rule . Once that rule has been violated, then you need to go ahead and clear your position. Do not get emotional about stocks. Do not convince yourself that it is going to come back because that is one of the worst things that you could do to convince yourself to violate a rule that you set up ahead of time rules air there so you can be very disciplined and or investing, because if you're not discipline, that is a good way to actually lose money out of your portfolio instead of increasing your profits in your portfolio. So what you need to do is have a risk management plan. Establish your floor before making any trays. Also, you need to protect the upside. You need to decide if you make a tremendous amount of profit in a short period of time. You need to come up with the rule when you're going to take some of and some or all that profit off the table so you have to say if it's going up 25% if has gone up 50% if is doubled, then how much of that position I am going to take off the table? Ah, lot of times two people will look at their portfolio, have a very hot star and say I'm rich. Don't take any profit off the table. Keep in mind until you take the profit off the table that profit Onley exist On paper, it is not really profit. So consider taking some or all of out the table if it makes a big move and I'm gonna show you why that is so important in the next slide. 8. Deadly Mistake #5 Example: Okay, Now we're going to go into an example of why you need an exit plan, and I'm gonna use BlackBerry. Is that example of why you need an exit plan? As you can see, it is currently trading at $7 in 59 cents. Now, this price doesn't tell you much about the story. I'm getting ready to tell you, but once I show you the 10 year chart, then this price is going to play a pert pretty important role in why you need to exit plan . So what I'm gonna do is I'm going to scroll down an issue. Could see you can see a chart over the years for BlackBerry and its price movements. So I just want to show you a little bit about what happened with the business and stop price of blackberry. So, as you can see, it was humming along right around the teens, maybe 1500. And then it started to climb a little bit. Ah, 5 4006 And it had a pretty, ah, steep rise in a pretty steep far right in the period between 2000 and six in 2000 and 12 so Let's start the story. Um, maybe around 2006 and you see around 2006 it looks like the stock price is hard to no specifically. But maybe the stop price was right around. Okay, showing it up here. So, um, it was right around the mid twenties. 25 $26. If you purchased that BlackBerry stock at that time and rode it out for a year, then it went up to the mid upper forties, so that was a pretty decent gain from it 2006 to mid 2007. If you waited another year, even less than a year, you can see that this price actually went up. And I would say it's around 1 25 or so. So you had a pretty big jump in profits from 2007. And it's not even the end of 2008 and you've got a pretty big rise here. Now, let me just point out something because that profit in the price, Aziz, we call it in the stock market. Ah, in the stock market, really kind of going pear bolic here from if you have an exit plan, and if you are rules based investor, then this kind of increase in price would make you consider to take profits here. So if I had a rule saying that if ah, the price increased by 50% I was going to take half of the profits. And then if it moved another 50% I was going to take the other half. I would be taking profits along this trajectory. I predict eject ary here. And the reason being is that if you have spent any time in the stock market, stock prices can be very volatile. And even if it's a good business in a good stock, you can always assume that there's gonna be some volatilities, some up and down movement. So because this such a big move, I'm gonna definitely apply my rules and lock in some profits. Now, keep in mind, I'm going to point out something. 2007th 2008. This is a long time that Apple introduces its first high phone in prior to the iPhone. Everybody knows back in that time that blood very pretty much ruled the market as farce smartphones. I think everybody in corporate America had a BlackBerry so we had most of the market share . So this is just when Apple was starting to enter defray. So keep that in mind. So once upon and so again, I being a rules based investor, is going to take some of these profits here and make sure they don't evaporate. But say you're not rule based and you let gree takeover. Um, this is what's going to happen to you now. I know at the beginning of 2008 it takes a dip. And, like I say, stop prices move up and down. But if you've already taken some profits, you're not. Maybe you're not too too concerned. Now, if you're still holding your entire position and it's guy rockets all the way up to 1 36 you're probably patting yourself on the back, feeling pretty good about yourselves, saying I'm glad I I didn't have any rules or abandon those rules cause look how high to stop prices gone. But I'm gonna show you how that will pretty much marching into the high because after is reached its peak of 136 in a year's time, this stock price has gone from 1 36 to really is probably upper thirties, low forties. So if you start purchasing in 2007 your stock has taken a round trip and going right back to where it was. So you've missed out on all these juicy profits right here, and it's two years later. So essentially you've held the stock, and now you have nothing to show for because you've allowed all these profits to evaporate . Now look out from 2009 to now, it makes a recovery in here and a pretty decent recovery, maybe mid seventies, mid to upper seventies. Now, if you kept it, realize you didn't implemented rules and despite back up, this would be a good time to implement those rules again and take some profits off the table. But once again, what happens with a lot of investors, particularly rookie investors? They let emotions take over. They think about the glory days of 1 36 and think that it could possibly go back there. But if you have paid attention to this class and one of the things that I emphasize is knowing the business there, you will know that BlackBerry is in a little bit of trouble, because at this time the iPhone is starting to take more, more of thes smart phone market share. And what is happening over the years is that BlackBerry is starting to lose share. And I remember doing this time they came out with phone at the phone and it never offer any serious competition to the iPhone. So the business is starting to deteriorate, and so dust the stock. So, as you can see by 2012 now it's gone down to maybe 15 hours. So that is pretty stunning. You've got from 65 to maybe 15. So once again, if you bought back in 6 4007 not only you've missed out on all these profits, you've actually lost money. So this is why you need an exit plan. When you see prices spike up, you need to take part of that off the table. So at least if you lose part of it, one you are now playing with house is money and to don't worry about the fact that you may have taken profits here under 100 it went to 1 35 because the long term goal of stock investing is to make sure that you lock in some decent profits. You're not gonna always get out at the top, and people are always trying to predict the top. Why don't you make decent profits? You need to really take some off the table, because when you try to time it, then sometimes you overstay your welcome. And this would happen to the greedy investor in 12 4013 and Xterra. So the more of this story with BlackBerry just so I can give you the whole story on what happened with this business is that the business became broken, as I said before, because BlackBerry the company became very complacent and they always thought that they would have the market share of corporate America. Because corporate America, prior to the popularity of the iPhone, use blackberries. They thought the iPhone would never challenge them. Well, we know how that turned out. And actually, I don't really know any corporation in America that do not use iPhones. Ah is their corporate cell phone. There may be a few I don't know of any. So by the time they try to stage a comeback, they were so far behind the technology that they eventually lost the battle. I phone, as you know, just became a monster, consumer and corporate product. BlackBerry never could recover in issue. See, the stock is now at $7.59 and it never recover. And honestly, it never will. So this is why you need an exit plan before you start trading the stock. And that is to prevent your emotions from taking over like greed and staying too long. Or you're going to end up like this poor investor who not only lost most of profits but actually now holding the stock at a loss. So I hope this is a good lesson for all you guys out there. 9. Deadly Mistake #6: okay on to deadly mistake Number six That leaves estate number six is putting all your eggs in one basket. Under no circumstances should you invest all your money in one stock. Let me repeat that again. Under no circumstances should you invested all your money in one stock. Do not confuse this with a fund where you have a bunch or a basket of stocks within the fund. That is something totally different, but you should not invest in one individual stock. I don't care how great the businesses. I don't care how great the stock performance is. What could be up today could be down tomorrow. It could be hot. Today can be cold tomorrow. You never want to do that. Trust me, the solution is to diversify. You want to diversify by sector, and what do I mean by sector by industry, Whether it's energy industrials, technology, financials, materials, those are some of the major ones by size, Whether it's a smaller company or a larger company and also by business, is it all domestic, or do they also do business internationally? You want to make sure that you spread it out so you're not over exposed toe one thing that can sink your ship and let me give you an example of that. I came up with this list and there are many, many examples, but I call these the High Flyers that crashed the Earth. This is just an example. Four businesses that crash the Earth in a matter of months and did not even take a year. Their value was cut by 50% or more. So just let me give you an example. One is an example I used in a earlier video in this class BlackBerry. The high was 1 36 You traded down the 45 now it's at about seven or eight bucks. Valiant Value is a huge drug. Pharmaceutical company was a high flyer darling off Wall Street, $250 went all the way down the 30. I think about this. This is happening in a matter of months. The 3rd 1 Twitter Twitter, was a hot stock is well traded at 70 and tumbled all the way down the 32. The last one to po Italy to Poli at one point was the darling of fast casual restaurants, ran into a huge problem with the E. Coli, the Bacho and everyone getting sick. So it traded from 700 tumbled all the way down the three team. These air just a few examples of many times when there's a hot business and everything seems to be clicking on all cylinders and then all of a sudden it takes a nasty tumble. This is why you want to make sure that you choose wisely and diversify your portfolio. So just in case something like this happens, you haven't lost all your money betting on one pony. 10. Deadly Mistake #7: Okay. Now, on to the final mistake that Lima State number seven is delusions of grandeur trying to get rich too quick. I know you hear a lot of stories people think stop market, Wall Street millions and millions of dollars. Well, that usually doesn't happen for the retail investor. So what you need to do is make sure you have the correct my set. This is a way for you to accumulate wealth over time. This is not a way for you. Do get rich quick. So make sure that you go in knowing this is your objective. So your solution is to set realistic expectations because the average stock market return to 7%. You make make a little less. You may make more, but don't count on more than that, so you can see that you're not going to get rich overnight. If you have the correct money, said, then you're not going to make risky decisions. Ah, lot of times people will actually trey too much or by a risky stock, or put on positions that they have no business putting on in the losing a considerable amount of money. So if you could have the right mindset and know that it's going to take time. You need patience and discipline. You are going to make money in the market, so just be patient. 11. Wrap Up: Okay, let's just summarise all the points we covered in class one. No outstanding credit card debt and credit card debt. Average a PR 15% every start return 7% to no emergency fund. You need to have emergency final at least 3 to 6 months before you start investing number three. No long term view. Your long term view for your investment account shouldn't be 3 to 5 years even longer if you prefer number four buying on a hot tip. Remember what's hot today? Maybe cold tomorrow, So you want to make sure that you re search it thoroughly. No exit plan. Make sure you take some profits off the table. You never know when that business will take a turn for the worst. And also you want to watch your stocks just in case it's a failing business. You if you see it in free fall, you don't want to make you don't want it to go all the way to zero. Lose so much money. Um, before you sell the stock. So having a clear exit plan six. Putting all your eggs in one basket, you never want to do that. I don't care how fantastic. A stock is. Businesses can turn on a dime every day. Or he could get, um, hit by newsworthy piece, and it can go down the drain. Seven delusions of grandeur. Make sure that you stay patient and you stay disciplined. This is not a get rich quick skin. The every stock return. Once again, it's 7%. This is a long term play on accumulating wealth. Okay, now we're gonna get around to discussing your project, and your product is going to be very easy. One. What is the biggest deadly mistake you have made while trading and name? At least one a couple, if you have and to where the biggest debt land mistakes that you are afraid of And why this Ah, lot of times will keep people from investing in the market. So I would like to know what's holding you back. And maybe I can help you with that. Okay. All right. We've gotten to the end of our class, so I did a snapshot of this, um, bar on skill share. So please review my class. Give it a review. Hopefully, you're going to give it a thumbs up and say how super awesome it is. I appreciate you very much. I hope you I see you in the next class