Cheat Codes For Successful Investing

Today’s video games are a lot more complicated than those I played when I was growing up. First of all, the controllers have more buttons than the joysticks I used, and, on top of that, the games are a lot more complicated.

​​To get a leg up on the competition, the kids rely on “cheat codes” – secret keystroke combinations for game controllers that unlock special powers, benefits, and upgrades in the games. These cheat codes aren’t out in the open. You have to look for them or get them from seasoned gamers who know them, but you’ll have a distinct advantage over the competition when you do get your hands on them.

There are also cheat codes that investors can leverage to rise above the crowd in the game of investing. Just like video game cheat codes, you have to know where to look to find them, and you have to be willing to break away from the norms to take advantage of them.

The biggest clue for finding investing cheat codes is to study the habits of successful investors. From studying the habits of seasoned investors and from my own experience, here are the important investing cheat codes you should incorporate into your investing game.

GO AGAINST THE HERD.

​​If you want to be average, do what everyone else is doing. The regular investing crowd is playing a game of timing – buying low and selling high. Don’t expect to beat the market if you play the timing game. The average retail investor can’t even beat inflation.

If you want to do better than average, you’ll have to break away from the crowd. This includes friends, family, and chatter (social media, news). Breaking away from the crowd also means going against everything you’ve been conditioned about investing where Wall Street has always been the focus. The crowd – the masses – is not who you want to be running with. The masses are typically slow and wrong, but they’re often behind the curve.

So why do the crowds do what they do if it does them little good?

​​Because there’s comfort in numbers. They feel comfortable doing what everyone else is doing. The investing herd sticks together for safety, security, and the certainty that they’re not different and won’t suffer the stigma of standing out from the crowd.

The most successful investors are quiet. They don’t care what the crowds are doing. They move against the herd. They neither seek nor need validation from others. They don’t buy into the same myths or preconceived notions that Wall Street and society indoctrinate with investors – the biggest myth is that great reward only comes at great risk.

​​Elite investors know better. They know of a class of assets where greater rewards can actually be achieved at less risk. They also know this class of assets can only be found on the private markets, not the public ones. By parking their capital in private investments (alternatives), elite investors have found a cheat code for outperforming public equities (stocks, ETFs, and mutual funds).

Private alternatives are one cheat code ultra-wealthy investors have relied on for decades and continue to rely on today – 81% of Ultra-High-Net-Worth Individuals Use Alternative Investments (Motley Fool).

MENTORS.

​​Another cheat code ultra-wealthy investors rely on is mentors. Very few elite investors stumbled on the cheat codes themselves. They had to acquire them from someone else. Mentors are essentially cheat codes that unlock other cheat codes.

​​Knowledge isn’t the issue; it’s the execution. Knowledge is everywhere but applying that knowledge is another story. Sure, there are so-called “gurus” offering to sell their knowledge, but they’re not real. Most don’t practice what they preach.

The best mentors carry a proven track record and not a fake resume or a one-off success story that makes for a good speech. There are a couple of mistakes to avoid when it comes to considering or working with a mentor:

a. Mentors are not going to write your business plan – to give you the exact plan of to-dos. Don’t expect mentors to do everything for you. Mentors are strategic – big picture – and not someone you should seek out or expect for step-by-step instructions.

b. Mentors are not your life coach – do not seek them for motivation. If you seek a mentor for motivation, you’re not ready for a mentor, and if a mentor offers motivation, they’re the wrong kind of mentor.

Mentors give you the cheat codes, but you’re the one who has to play the game. Mentors point to the path; you’re the one who must walk it. They are among the best and most important cheat codes for successful investing because they point you to other cheat codes. They can make introductions and refer you to those that can assist you. Mentors drown out hype and buzz and don’t discuss drama or the news. They’re all about actual success and not appearances.

INCOME INVESTMENTS.

​​Another vital cheat code for investing success is investing for income. While the herd focuses on timing, winning investors focus on leveraging time. Passive income allows them to leverage time. Cash-flowing assets that pay reliable and periodic income can be compounded, and it’s that power of compounding that builds, accelerates, and maintains wealth – something that public equities cannot claim.

Choosing income as a key component of your investment strategy is a necessary cheat code your pursuit of financial independence could not do without. It’s the one cheat code the ultra-affluent require of their portfolios to create an income stream separate from their careers – an income stream that is essential for financial freedom.

ADVANCED TAX STRATEGIES.

​​You’ve heard of the term there are two ways to skin a cat. Leveraging the tax benefits of private investments – especially in tangible assets – is just another way to build wealth. Whether you’re putting another dollar into the compounding wealth machine from additional income or tax savings, the result is the same.

​​How powerful is your wealth machine if you’re attacking from both the revenue and tax savings angles? ​​This is a cheat code ignored by the upper-middle class and even high-income earners. Smart investors leverage tax benefits to their full advantage.

If you don’t have the cheat codes for investing success, you’ll be another herd member. The cheat codes are accessible to everyone. You have to seek them out and apply them.

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