Why do so many investors actually LOSE money?
In one word: emotion.
In the first part of this series, we looked at the basics of the Millionaire Blueprint, a simple investment plan that can realistically grow an investment of $10,000 to $1,000,000 in about eight years.
Now let’s take a look at the simple rules that make following and executing the plan a simple process…
The primary Millionaire Blueprint rule gives you the key to success: remove emotion from the equation.
Everyone gets excited when their stocks go up and mad when their stocks go down; that’s normal.
But the deadly trio of Fear, Greed and Hope has ruined many investors.
When you’re in the middle of an emotional flood, it’s often difficult to remember this key investing fact:
No matter the share price, you have neither made nor lost ANY money until the trade is closed.
What’s the secret to keeping your emotions under control and, ultimately, conquering the deadly trio?
Two words: Decision triggers.
What Are Decision Triggers?
Decision triggers use the cold, hard, rationality of “the numbers” to eliminate destructive emotions from your portfolio management process.
Before you invest your first dime, you make two critical decisions:
- What is your profit target?
- How much loss are you willing to risk?
The Millionaire Blueprint 20/10 Rules to Investing set these values at a 20% profit or a 10% loss for short-term investments. This is how you secure your investing gains and prevent big losses.
This way, ALL of your short-term investments have the SAME profit and loss decision triggers.
Stated another way, when you follow the Millionaire Blueprint 20/10 Rules, your objectives are to never, ever give back a gain and don’t let a small loss become a big loss.
Yes, those are emotional issues… that’s why we have the rules.
For your medium- and long-term investments, the decision triggers change, of course.
If you decide to keep one of your short-term investments for the medium term, the profit target becomes 40% and the loss trigger becomes 20%, keeping your short-term gain.
If your weekly analysis tells you a medium-term investment still has enough potential, you set the new sell trigger to 100% and the loss trigger to 40%.
You use decision triggers to make the only important decisions necessary: when to take your gains and when to keep your losses small.
If smart gains and small losses sound good to you, find out now about the simple investment plan that can realistically grow an investment of $10,000 to $1,000,000 in about eight years.