RULE 74: Don’t Chase Bad Luck Runs

Actor Barrister Femi Adebayo with Actres Iyabo Ojo

We all have a
tendency to buy on tips from other people, buy on a whim, buy glamorous, invest
too much in anyone thing; ride a winner to death and, most fatally of all, fail
to quit a loser. This is the one we really must learn to let go of.

There are four
types of investors and it is clearly important to check which one you are – and
which foibles you present. Thanks to Merrill
Lynch
(www.ml.com) for letting me reproduce this:
The Competitive Investor. Makes up
around 17 per cent of all investors and that’s a 60/40 split male/female. Their
biggest pluses are that they usually start investing early, have a lot of
energy and are knowledge about their investments.
And the biggest
minuses? They are greedy, over-confident and love chasing a losing streak.
The Measured Investor. This is the
biggest group making up some 32 per cent of all investors with a 55/45 split
male/female. They are secure in their investments, confident and think long
term. Their one real big downside is they really find it hard to let go – they
too chase a losing streak.

 “Nothing clouds your judgment more than throwing
good money after bad luck runs. You have to learn to cut your losses and walk
away and yes, I do know how hard that can be”.

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The Reluctant Investor. This makes up
26 per cent of all investors with a 47/53 split male/female. They are more
likely to use an adviser, wait too long before investing and find it easier
than any other group to let go. They also don’t like wasting time’ on their
investments.
The Unprepared Investor: Represents 11
per cent of investors and a 47/53 split male/female. The description says it
all really. They wait too long to start, put in too little money and don’t let
go soon enough. They tend to concentrate on one investment too much and are
easily swayed by ‘hot’ tips.
Hannah Grove, chief marketing officer of Merrill Lynch Investment Managers says:
‘Money is an emotional instrument, but emotions can get in the way of making
the right investment decisions … If we can fathom our individual emotional
tendencies, then we can take steps to anticipate and correct them.’
It is imperative that you know what type of investor
you are – and when to quit riding a losing streak. Nothing clouds your judgment
more than throwing good money after bad luck runs. You have to learn to cut
your losses and walk away and yes, I do know how hard that can be. 
From The Book; The Rules of Wealth by
Richard Templar
(Read Rule
75
of Rule of Wealth tomorrow on Asabeafrika)

Read-to-Wealth Series








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