How Can I Get Rich From Stocks?
Almost everyone wants to get rich. Stocks are certainly a viable way to achieve significant wealth, but there is only one answer to that question.
Stop asking yourself that question. It's a misleading way of thought and will certainly lead you to losses in the stock market rather than becoming the next Warren Buffett.
Its okay to aspire to be rich, but like with any goal you must break it down into much more actionable steps.
Do you ask, "How can I become a world class marathoner?" Or, do you instead ask, "How can I improve my running?" One question leads to success, while the other question is putting you on a train of thought that leads to nowhere.
If you want to be rich from stocks shouldn't you know how to use a stock screener to find the right stocks? Shouldn't you know how to find the value of stocks so you aren't overpaying for them? Shouldn't you know how to maximize your mutual funds or Thrift Savings Plan?
Hey Readers! I want you to take a quick break and check out a few my other posts that can help you with your desire to be rich in the stock market:
- 3 Reasons Why Value Investing Works
- Smart Military Investor's Guide to Using A Stock Screener
- The Ultimate TSP Investing Guide
Just like anything else you would want to be successful at, stock investing requires a game plan. A game plan requires a certain level of knowledge, commitment and discipline.
For me, books are the best way to become knowledgeable in stocks. One book I highly recommend for beginners is The Five Rules For Successful Stock Investing by Pat Dorsey. After reading this book, you will have been equipped with tools to consistently buy stocks low and hold them long enough to make solid returns on your investment. I provided a link below so you can order the book directly from Amazon.
Commitment is more than just sticking with something for the long term. Especially in stocks, commitment means staying consistent with your investments despite what the market is doing.
You may very well lose half of your initial investment in a stock market crash. A committed person would let common sense prevail in a situation like this.
One would understand that a stock market crash doesn't mean quality companies go away. They would single out those quality business and double down during hard times while the general public is running away in fear. That level of commitment will make you rich in stocks.
Lastly, discipline is key to becoming rich in the stock market. The epitome of discipline is habits. I'm a believer that everything we do is guided by habits. Our brains are hard wired to never forget habits. To change habits, our brain doesn't just forget an old one. Instead, it uses a trigger from an old habit to start new one.
A book called The Power of Habit by Charles Duhigg explained how powerful triggers are and how they can be manipulated. In his book he explained how a marketer turned toothpaste into a house hold necessity. What that marketer did was make brushing your teeth go along with the same habit of needing to clean dirty things. In a TV commercial, that marketer had an actress run her tongue across her teeth and then said, "Want to get rid of this gritty feeling? Buy my toothpaste!" Boom! Toothpaste instantly became more than a good to have item. The understanding of how habits are formed made that marketer rich along with the toothpaste company that hired him.
Stock investing is no different. Find a trigger that you already have. Maybe it's a craving for chocolate. When that craving arrives, read a financial statement. You will turn analyzing stocks into a habit by tying it into a habit that already exists.
If you want to learn more about habit forming you can order The Power of Habit below.
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