How to Let Your Money Work for You

Adam Sarhan |

Money is a highly emotional and sensitive topic for most people. That’s why most people have a hard time consistently making money on Wall Street (primarily because they are making emotional, not rational, decisions).

Two Schools Of Thought:

Work For Your Money Or Have Your Money Work For You

There are two primary schools of thought when it comes to making money: either work for your money or have your money work for you. Most people are conditioned to blindly do the former and stumble, or outright ignore, the latter. The conventional wisdom that society teaches is for you to play it “safe,” get a job, put in the time, get a paycheck, save your money, work hard and your paychecks will grow as you climb the corporate ladder. Nowhere in that narrative does it suggest you have your money work for you. Invariably, people have to “learn” this important skill and that takes time, effort, and a lot of patience to learn how to properly implement it. The good news is that anyone can learn this important skill and through time can have their money work for them.

Profits Are A Function of Time

The first, and most important, step to have your money work for you is to change the way you think about money. Instead of thinking that you have to work for your money, start believing that your money can work for you. In order to actually have your money work for you, one of the most important facts for you to realize, is that profits are a function of time (in any business, not just on Wall Street). In that vein, patience is a critical component to actually having your money work for you. Sometimes, less is more and less activity can actually be better than over trading.

Change Your Thinking & Your Habits Will Change

Because most people are not aware that they have to reprogram their thinking, they end up doing the exact opposite of what is necessary to make big money in stocks. Successful people on Wall Street (regardless of their approach) let their profits run and cut their losses. Saying this and (knowing how to overcome your emotions) actually doing it are two very different skills. Most people cut their winners short because they are fearful that their profits will disappear (thus never capturing big gains). To make matters worse, the “work for your money mentality” causes them to engage in another harmful habit by letting their losses grow (because they want to get out at “break even” or they do not want to sell and admit they are wrong). For example, if you buy a stock at $50 and it goes up to $52 or $53 in a couple of days, most people will sell it and lock in the profit (because they are fearful that their profits will evaporate). Or if they buy it at $50 and it starts falling they hold on and “hope” that it will go back up and they can get out and break even. More often than not, the exact opposite happens (the stock that goes up keeps going up after you sold for a small gain and the stock that falls, keeps going down and your losses get out of hand).  That reminds me of the old Wall Street adage; Be fearful when others are greedy and greedy when others are fearful.

Learn more about FindLeadingStocks.com by clicking the link. The service is designed to teach you how to fish while giving you fish along the way. Each week we share our logic, show you how we are navigating the stock market, give you new trade setups (before they breakout), and give you exact entry and exit points in leading stocks as we add them to our model portfolio in real-time. 

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

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