Confidence is a great trait of many great people. They are easier to follow and easier to appreciate. Confidence is a huge driving force in financial success. Your financial success won’t come if you’re tentative about every financial decision you make.
That doesn’t mean you just rapid fire through your financial decisions, you do your best to weigh the pros and cons, and then you make a confident decision based on small investment tips.
Investing Is Confidence-Based
Investing is a confidence-based business. The confidence in certain stocks or in certain accounts is required before a financial advisor can recommend investing in one of these. Confidence is a requirement when investing and putting your money more out of your reach than just having it in your bank savings account or in your freezer.
The market is impossible to be 100% confident because it isn’t 100% guaranteed unless it’s a basic checking or savings account. Confidence is a driving force in the market. If one person is confident, it runs down the chain and makes numerous people confident.
Why Confidence Hurts You
Confidence can turn to arrogance very easily. It is a middle ground between humility and arrogance. No one has ever met a humble trader on the NYSE. No one has ever met an arrogant first-time investor. The more knowledge you have, the more likely you are to be confident. That’s how the world works. It’s just like having a job. The more you do it and the better you become, the more confident you are in your ability.
Confidence doesn’t hurt you; it’s overconfidence that can get you. The market and investment opportunities that are yielding high returns get a lot of attention, but many people are cautious because high rewards are a result of high risk. When you’re confident, you ignore the risk portion of the investment.
When you invest successfully time after time, you think that you can afford a small risk, but with your overconfidence, you go out on a limb and take a high risk. This is dangerous to your financial wellbeing. The high risk certainly means you are very likely to lose your money. Your overconfidence blinds you to this probability.
Should You Continue Taking On More Risks?
A risk is hard to judge and has no specific definition. The market volatility should be more of an indicator to whether you should invest than your confidence. Do not let your confidence overtake the reality of the market volatility. Taking risks and taking on more risks is the only way to grow at a rapid pace, but this is also a way for you to take a financial tumble.
Does More Risk Mean More Money?
The short answer is yes. When you take more risk it means the stock, account, or market is more volatile and if someone is going to buy, they are going to buy at a high price because they anticipate the value to increase. Your confidence dictates your ability to take chances Your overconfidence can contribute you to you making a lot more money, right before you lose it all to a huge risky, investment.
Overconfidence means more money for a short time. It results in people losing a lot of money because they believe they are too “hot” to take a loss or hit on their investments.
What Should You Do When Your Confidence Is High?
Take a little bit of time to review the market in the area you want to invest. Remember that your confidence means nothing when it compares to market confidence and market volatility. Take a couple of steps back down the risk ladder for investments. Investing can help you maintain your confidence, but humble you a little bit to remember that the only true confidence you can have in investing is in low-risk and low-yield investments.
Should I Take A High Risk?
Only take risks you can afford to risk. That is the biggest piece of advice for people investing regardless of your confidence level. Your confidence in your decisions and your confidence in the market will induce you to take riskier endeavors more often. You should take a high risk once in a while, but don’t invest too much money. Granted, most high-risk opportunities require a good bit of money before they will let you invest. Remember the key to beating your confidence is to keep the golden rule to investing in the forefront of your mind only take risks that you can afford.
Should I Remain Confident?
Yes, remain confident if you’re making good investment choices and be confident in your investment advisor if that advisor keeps putting you with winning investment opportunities. Confidence keeps you from being paralyzed when it comes time to make a big decision with a big amount of your money.
If you’re not taking a huge risk and losing, you should be confident. You should be confident that you’re making the right decisions for your team.
Which Decisions Should I Make?
You should make good decisions based on what you can afford to risk. Your confidence should only be as high as your ability to pay off on risks you can actually financially stand. The confidence in your money only goes as far as your money.
Your confidence is there for a good reason. It can help you make some difficult investing decisions. It certainly isn’t there as a tool to make high risks investments that you can’t pay back. Your decisions need to take into account your dependents, your financial situation, and your financial advisor. You can’t be confident if you can’t make a decision that will always ensure your dependents are cared for.
Should I Give Up Investing?
No! Do NOT give up investing. When you have the funds to invest, you need to invest. It is essential to spread your money around in order to keep your financial future safe. Remember the old saying to not put all of your eggs in one basket.
Be confident, invest, and be careful with all small investment tips.