The 7 Stages Of Maturity Of Investors
When were you born as an investor and have you thought about death?
Hi friends!
As investors, we go through different maturity stages. That's not only normal but also good. At the same time, we should be aware of these phases, know which stage we are in and look at our behavior in that way. Let's go through the phases one by one and you can discover which maturity stage you are in.
1. Investing Birth
As an investor, we are born, but the age we are born at differs for everyone. Personally, my investing birth was at age 37. Just like a birth in real life, there is a conception, a moment that sparks your interest. Maybe it's a friend, a teacher, an article or a book you read, maybe it's your financial advisor or bank or a media event that sparked your birth. If you are lucky, it was your parents or grandparents. We all start with a spark of interest that sets us in action.
Whatever it was, our Investing Birth started the journey we are still on today.
My investing birth was when my wife was pregnant 10 years ago. I got a sort of primal feeling of having to gather for our unborn child. My initial reaction was to invest in single malt whiskeys. I gave tastings sometimes then and knew quite a bit about it. But when I told my wife she said: "You will want to taste those bottles." My answer was that I had thought about this myself and that I would buy 3 bottles, one for me and 2 to invest. My wife is a lawyer and tax specialist, very down to earth and she said: "Well, that's minus 33% to start with then..." Of course she was right. After exploring a few other interests, mainly art, I stumbled on stocks and found out that you could learn so much about the world through investing. That was my birth.
2. Toddler
As a toddler, you try to walk but you keep falling, no matter how hard you try. You don't understand anything of the world yet, and many things seem very frightening. At the same time, you learn so much, often by feeling pain and remembering it's not something you should do again.
That's how an investor is in that very early stage as well. You don't know how to open a brokerage account, you make the most stupid mistakes, you may have never heard about bonds, etc. You make the most stupid mistakes but you learn fast because they hurt.
3. Young child
You already know a lot more than the toddler, but your knowledge is very new and wobbly. You try out things but there's a lot you don't understand yet that everyone seems to know already. Often, you want an adult / an experienced investor to help you with basic questions.
4. Teenager
You think you know everything best. You rush head down into new ideas, without restraint, without looking at the potential consequences. The only thing you are interested in is feeling the rush of the adrenalin. Rationally, you know you are acting dangerously, but you don't care. You YOLO into crypto and meme stocks, follow risky option strategies, day trade, and everything else that can give you ACTION! It's exciting, but also frustrating because you get nowhere with this kind of behavior, only in trouble.
5. Young Adult
Finally, you have reached adulthood. You know yourself and you start building out your life / portfolio. Your style is defined, although it doesn't mean that you only have one style. Hey, I'm a fan of classical music and metal, with many things in between; need I say more? You don't have to stick to one interest or one investing style. But if you want results, you will have to be consistent.
In life, you won't get great results if you hop from one job to another in a totally different area. The same goes for investing. If you are a value investor and a year later you are a growth investor and another year later, you are a dividend investor, you won't do great, as you are probably just following the latest trend.
The best investors know that they will underperform sometimes, even for years every now and then, but they will get out stronger. In the same manner, some people will see hard times at work but can still climb the corporate ladder or become their own boss because of their experiences.
6. Mature Adult
As a young adult, you could become agitated if something didn't go well at work / in your portfolio, the more mature version has seen it all before and remains calm. This, too, shall pass. Maybe they adapt their approach slightly, a bit more conservative, or maybe it's the other way around and they are finally zen enough to not care about the volatility of growth stocks that could give better gains. No matter what, you don't let your portfolio decide what your mood will be.
7. Death
This is not the most popular stage, but it comes for all at a particular moment, also for your portfolio. Thinking about what will happen and preparing for it is crucial. Do you want to spend all your money before you are not here anymore? Or do you want to leave something for those who will stay on earth for longer than you? Children, grandchildren, maybe? Having a death plan is important.
Conclusion
All of these stages can be at different moments in your life. As I said, as an investor, I was only born at the age of 37. And you may know people who stopped investing forever and are already dead as an investor. Maybe they even had a premature death, as in investing, many never reach adulthood.
So, what stage are you in? Is that the stage you want to be in or not, dear reader?
This visual summarizes this article.
In the meantime, keep growing!