When I was in college, I competed at chess tournaments. I quickly realized that more games were lost by blunders than won by brilliancies. Now my day job involves helping remarkably successful people prevail outside their specialty. This post has the gleanings of thousands of interactions with millionaires. Here are 11 surprisingly common mistakes.
Learn from Your Mistakes
We all make mistakes, but we don’t all learn from them. Reflection and regret sometimes lead to realization that what we did was wrong or unproductive and that we should avoid it in the future. One sign of wisdom is recognizing that it is counterproductive to continue to beat your head against the wall.
We learn faster when we spend less time denying mistakes and more time trying to learn from them. The faster you begin learning, the faster you get the benefits.
Check Your Blind Spots
We all have blind spots–weakness which others see, but that we are not aware of. We see the silliness of the obese smoker who claims to value health. Many of us claim to want something but persist in some counter-productive behavior. Get friends to help you identify your blind spots. Then work on eliminating them.
Hubris bites many of us. Too many people blew a career or relationship because they thought they could do or say wrong, and no one would know. In Greek tragedy, hubris is followed inevitably by nemesis. Cultivate humility.
Wishing Won’t Make It So
Rich and poor each sometimes believe that if they wish hard enough, they can make it so. The poor hope that lottery tickets are their escape from poverty. The affluent hope that their stock or property value will go up dramatically more than the historical average. Listen to your professional advisors. That’s why you pay them.
Assess the Odds
Although 99% of adults can add, subtract, multiply, and divide, few understand statistics or probabilities/odds. If you’re not good at assessing the probabilities, get an expert on your team. You’ll make better decisions when you know the odds.
Don’t Be Afraid to Make a Mistake
Everyone hates to make mistakes. People who are afraid to make a mistake let opportunities go by without acting. Inaction is among the worst mistakes of all.
Small Trials can Create Big Wins
Stop the failures quickly and try variations of what seemed to go well and try again. The “PayPal mafia.” used this strategy. They tried things, knowing they would often fail, learned from their experience, and tried again. Continuous iterative improvements build on many on tiny improvements.
Quit Hoping for a Rich Fool
A surprising number of rental owners hope to find a rich fool who will pay an exorbitant price for their average asset. In real life, investors won’t pay a premium for average. Average has value, but not spectacular value. Equity trapped in an average investment never has the option of earning above average or spectacular returns.
Consider the Options
Wise people explore whether better investment options are possible. Just because one knows how to ride a bike does not mean that bike riding is the best way to travel 1000 miles.
Nobody Cares if You’re Uncomfortable
Often investors enter a competitive arena expecting to be catered to. There is a scarcity of truly superior options. Wealth does not guarantee the ability to dictate terms, especially when many qualified buyers are vying for each opportunity. Neither the seller nor the competing millionaires care whether you are pleased with the process.
What truth about mistakes is missing? Let me know. I need all the help I can get.
Terry Moore, CCIM, is the author of Building Legacy Wealth: How to Build Wealth and Live a Life Worth Imitating. Read his “Welcome to My Blog.”