Many people go to the gym with the wrong expectations, wanting to lose weight in record time, build muscle in two weeks or get a six-pack in a month. People also come into the stock market with the wrong expectations: some want to make a lot of money in record time, and although you might get lucky now and then, the truth is that it doesn’t usually happen.
At the gym everyone shares their secret, and the funny thing is that each person has their own method, one that has worked for them, but you will rarely hear two people share the same routine. Some routines and diets are complicated and hard work; others could even be dangerous for a beginner.
In the same way, two people can’t start out the same way: depending on body weight and experience, some will need to use lighter weights while others should start with heavier ones.
When it comes to getting fit and losing weight, the guidelines really need to be simpler so that everyone can manage it. It’s about training three or four times a week, being consistent and following a diet that matches our goals.
In investing, just as at the gym, that is the secret. A lack of understanding and a failure to put in hard, consistent work are the factors that stand between us and financial success. We need to follow a plan in which we put our spending on a diet, save, and invest wisely according to our goal, which as a general rule will be long-term.
What about shortcuts?
We look for shortcuts at the gym, and we look for them in investing too. At the gym, some people lift more weight than they should, hoping to build muscle faster. Sometimes all they get is an injured muscle or ligament. In the stock market, the shortcut to building wealth is usually leverage, which, in the hands of someone who isn’t prepared to use it, can end up hurting them financially.
Using the wrong machines
If we want to work a specific part of the body, we need to use the right machine or training for it. If you want bigger biceps, you wouldn’t sign up for an aerobics class, and people who want a six-pack wouldn’t use machines for working the back.
In investing, using the wrong investment product can give us unwanted results. ETFs, warrants, CFDs… they have to be used very differently from individual shares, and above all, you need to understand the product perfectly.
Basically, the gym and investing, just like personal success or business, come down to the same thing:
- We need to be clear that success in any of these cases means not chasing quick results.
- We need to be consistent.
- Start with small, short-term goals (without losing sight of the long-term horizon). Saying “I’m going to lose 60 kg in a year” is not the same as saying “I’m going to lose 2.5 kg every month”. And yes, it would take us two years, but it’s easy to meet our goal each month, and that keeps us motivated.
- It takes a lot of training and work. Whatever you do, you’ll have to prepare properly and work hard to achieve it. There are no big rewards without hard work.
Further reading
- 5 common mistakes of beginner investors
- The essence of intelligent investing to build long-term wealth
Featured image: Santeri Viinamäki, CC BY-SA 4.0, via Wikimedia Commons.
