genie out of the lamp

Busting the Investing Myth

The power of planning for success

When I say the word, “Investing,” what comes to mind?

For most people, it’s the Hollywood version of the word—busy trading floors with brokers shouting buy/sell orders, images of tycoons making millions in one spectacular trade, or stock prices plummeting and investors diving out of skyscrapers.

The problem is that is not investing.

Financial silliness

A number of years ago, I watched an interview with Warren Buffett. During the interview he said, “The only reason I go to the market is to see if someone is about to do something silly.”

What most people think is investing, one of the most successful investors in the world called financial silliness.

Buffett went on to explain that he didn’t watch pundits on TV or the ups and downs of share prices to gain investing advice. In fact, his investing was actually done far away from all the noise, stock promotions, and people who make money from so-called investment news.

Less excitement, more planning

My rich dad also thought that the Hollywood version of investing was financial silliness.

“Many people think investing is this exciting process where there is a lot of drama,” he said. “Many people think it involves a lot of risk, luck, timing, and hot tips. But to me investing is a plan—an often dull, boring, and almost mechanical process of getting rich.”

For rich dad, the dull, boring, and almost mechanical process of getting rich was his formula based on his favorite game, Monopoly, a game he taught his son and me when we were kids.

That formula was simple: Buy four green houses. Exchange four green houses for a red hotel.

At the time he was teaching us this formula, rich dad didn’t have his red hotel in real life. But by following his plan, he had a number of them within ten years.

Rich dad was adamant that this was not a difficult or complex process. He simply invested in a good deal and then “traded up” those investments when able. “One day,” he said, “I woke up and realized I was rich.”

Bored to poor

The question is, if investing is a matter of simply following a formula, then how come most people don’t follow the same formula?

The reality is that most people do not want to follow boring formulas. They get dull. Most people start following a plan and then they get bored.

The result of this is often loss of money or breaking even. With the exciting and wild swings come fluctuations in money but never the slow, steady, measured growth a true investor looks for.

“Most people think there is some magic to getting rich through investing,” rich dad said. “Or they think that if it is not complicated, it cannot be a good plan. Trust me. When it comes to investing, simple is better than complex.”

Find your formula

Rich dad’s simple message to me years ago was: “Find a formula that will make you rich, and follow it.”

Kim and I started The Rich Dad Company decades ago to help people find their formula. Whether through books, games, apps, classes, seminars, or coaches, we’re dedicated to opening people’s eyes to the possibilities before them.

Often the world of investing can seem overly complicated and overwhelming. It doesn’t have to be. Finding your formula starts with some simple financial education, making a plan, and simply sticking to it.

I encourage you to explore what your formula may be and to start putting it into practice today.

Original publish date: April 08, 2014

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