WEBVTT 00:00:00.490 --> 00:00:03.330 Now, if you know anything about poker, then you'll 00:00:03.330 --> 00:00:06.129 know that it's a zero -sum game. For somebody 00:00:06.129 --> 00:00:09.310 to win, somebody else needs to lose. Now, for 00:00:09.310 --> 00:00:11.509 the first few hands, it's all about luck. The 00:00:11.509 --> 00:00:14.109 person got the best cards, they'd like it to 00:00:14.109 --> 00:00:17.890 prosper. But after a few hours, something changes. 00:00:17.949 --> 00:00:21.309 It's no longer about luck. It turns into a game 00:00:21.309 --> 00:00:24.809 of skill. And the most experienced and most skillful 00:00:24.809 --> 00:00:28.350 players move ahead, while the unsophisticated 00:00:28.350 --> 00:00:31.500 players lose the shirt. now in the world of investing 00:00:31.500 --> 00:00:34.960 things are a bit different the stock market is 00:00:34.960 --> 00:00:39.020 not a zero -sum game now the big difference being 00:00:39.020 --> 00:00:42.079 that the stock market grows faster than inflation 00:00:42.079 --> 00:00:46.079 therefore it's theoretically possible for everyone 00:00:46.079 --> 00:00:52.320 to win but sadly this doesn't happen hey everyone 00:00:52.320 --> 00:00:55.479 i'm eric from time to retire and welcome back 00:00:55.479 --> 00:00:57.619 to the channel today I'm going to talk about 00:00:57.619 --> 00:01:00.740 something a lot of people don't like to think 00:01:00.740 --> 00:01:05.359 about. Are you an unsophisticated investor? I 00:01:05.359 --> 00:01:07.640 know it sounds a bit harsh, but stick with me 00:01:07.640 --> 00:01:10.599 because by the end of this video, I'll explain 00:01:10.599 --> 00:01:16.540 what I mean. Okay, let's start with a basic question. 00:01:16.920 --> 00:01:22.519 What even is an unsophisticated investor? Before 00:01:22.519 --> 00:01:26.939 you get defensive, let me clarify, being unsophisticated 00:01:26.939 --> 00:01:30.379 doesn't mean you're bad at investing or that 00:01:30.379 --> 00:01:33.420 you're not smart. It just means that maybe you 00:01:33.420 --> 00:01:36.159 don't have all the tools or the knowledge you 00:01:36.159 --> 00:01:38.560 need to make the best decisions for your money. 00:01:39.060 --> 00:01:42.519 So what does that look like? Well, unsophisticated 00:01:42.519 --> 00:01:46.939 investors typically buy stocks based on hype, 00:01:47.120 --> 00:01:50.540 like jumping on the bandwagon when a stock is 00:01:50.540 --> 00:01:55.159 trending. don't diversify their portfolios so 00:01:55.159 --> 00:01:57.959 they're putting all their eggs into one basket 00:01:57.959 --> 00:02:04.719 they make decisions based on emotions now selling 00:02:04.719 --> 00:02:07.480 when the market crashes or buying when it's soaring 00:02:07.480 --> 00:02:10.659 you know trying to time the markets instead of 00:02:10.659 --> 00:02:14.860 staying consistent with long -term goals and 00:02:14.860 --> 00:02:18.900 sometimes they rely too much on news headlines 00:02:18.900 --> 00:02:23.389 social media posts or hot tips instead of understanding 00:02:23.389 --> 00:02:27.349 the fundamentals of the stock market. Basically, 00:02:27.569 --> 00:02:30.310 it's investing in a way that feels good at the 00:02:30.310 --> 00:02:33.930 moment but may not actually set you up for long 00:02:33.930 --> 00:02:39.069 -term success. So how do you know if you're an 00:02:39.069 --> 00:02:42.330 unsophisticated investor? Now, there are a few 00:02:42.330 --> 00:02:46.430 questions to ask yourself. Firstly, do you panic 00:02:46.430 --> 00:02:50.300 when the market drops? Now, if you sell off your 00:02:50.300 --> 00:02:53.659 stocks as soon as you hear bad news or you see 00:02:53.659 --> 00:02:57.860 a drop in price, that could be a red flag. Do 00:02:57.860 --> 00:03:01.919 you invest in stocks based on a friend's advice 00:03:01.919 --> 00:03:06.259 or a random Reddit post? Now, investing based 00:03:06.259 --> 00:03:09.479 on a tip or a rumor instead of doing your own 00:03:09.479 --> 00:03:13.460 research is what a lot of unsophisticated investors 00:03:13.460 --> 00:03:17.560 do. Are you overwhelmed by financial jargon? 00:03:17.930 --> 00:03:20.129 Now if you don't understand the key concepts 00:03:20.129 --> 00:03:23.909 like diversification or price to earnings ratios, 00:03:24.129 --> 00:03:27.590 it may be time to level up your knowledge. Do 00:03:27.590 --> 00:03:31.250 you focus only on short -term gains? Now if the 00:03:31.250 --> 00:03:34.169 goal is to get rich quick, you're probably not 00:03:34.169 --> 00:03:37.569 thinking about investing for a long -term strategy. 00:03:38.669 --> 00:03:42.490 Now let's talk about what it means to be a sophisticated 00:03:42.490 --> 00:03:45.759 investor. Now this doesn't mean... You need to 00:03:45.759 --> 00:03:48.740 be a Wall Street expert or have a finance degree. 00:03:48.919 --> 00:03:52.699 It just means you're making informed, thoughtful 00:03:52.699 --> 00:03:55.500 decisions that are likely to pay off in the long 00:03:55.500 --> 00:03:59.599 run. So here's the mindset of a sophisticated 00:03:59.599 --> 00:04:05.580 investor. They make decisions based on information, 00:04:05.639 --> 00:04:09.939 not emotions. They understand the risks, but 00:04:09.939 --> 00:04:13.580 they stay calm during market fluctuations. They 00:04:13.580 --> 00:04:18.350 focus. on long -term growth not quick wins our 00:04:18.350 --> 00:04:20.990 sophisticated investors you know that wealth 00:04:20.990 --> 00:04:23.889 is built over time and they trust their strategy 00:04:23.889 --> 00:04:30.209 they invest less often they diversify their portfolio 00:04:30.209 --> 00:04:33.110 so they don't put all their money in one stock 00:04:33.110 --> 00:04:36.970 or one sector or one asset class and they continue 00:04:36.970 --> 00:04:40.970 to learn our sophisticated investors know they 00:04:40.970 --> 00:04:43.170 don't know everything so they keep educating 00:04:43.170 --> 00:04:45.819 themselves in the markets that they're investing 00:04:45.819 --> 00:04:50.100 in. So how do we stop being unsophisticated in 00:04:50.100 --> 00:04:54.199 our investing and improve? Firstly... educate 00:04:54.199 --> 00:04:58.040 yourself start by learning the basics of investing 00:04:58.040 --> 00:05:02.560 terms like diversification risks tolerance compound 00:05:02.560 --> 00:05:06.139 interest these are important concepts that you 00:05:06.139 --> 00:05:08.519 really do need to understand now there's tons 00:05:08.519 --> 00:05:11.240 of free resources out there there's books podcasts 00:05:11.240 --> 00:05:17.300 youtube channels and even online courses next 00:05:17.790 --> 00:05:20.810 create a plan successful investors don't just 00:05:20.810 --> 00:05:24.750 throw money into random stocks they have a plan 00:05:24.750 --> 00:05:28.269 now decide what your financial goals are now 00:05:28.269 --> 00:05:31.129 are you saving for retirement for a down payment 00:05:31.129 --> 00:05:35.069 on a house set those clear goals and align your 00:05:35.069 --> 00:05:39.610 investments to meet the goals And also diversify. 00:05:39.610 --> 00:05:42.370 Don't put all your money into one stock. Even 00:05:42.370 --> 00:05:45.449 the pros don't do this. Spread your investments 00:05:45.449 --> 00:05:48.230 across different asset classes, stocks, bonds, 00:05:48.589 --> 00:05:52.110 real estate, etc. And this reduces your risk. 00:05:52.569 --> 00:05:55.110 And we also need to invest in the long term. 00:05:55.170 --> 00:05:57.750 The stock market, it's a marathon, not a sprint. 00:05:57.949 --> 00:06:02.230 So consider low -cost index funds and hold on 00:06:02.230 --> 00:06:04.579 to your investments for the long haul. Don't 00:06:04.579 --> 00:06:07.680 get distracted by short -term market moves or 00:06:07.680 --> 00:06:12.259 try to time the market. Next, we need to stay 00:06:12.259 --> 00:06:15.300 calm during volatility. Now, the market goes 00:06:15.300 --> 00:06:18.319 up and down. It's part of the game. Sophisticated 00:06:18.319 --> 00:06:21.399 investors don't sell when the market crashes. 00:06:21.459 --> 00:06:24.459 Instead, they stick to their plan, and sometimes 00:06:24.459 --> 00:06:28.259 they even buy more when the prices are low. Now, 00:06:28.259 --> 00:06:31.680 they also ask for advice. Now, no one knows everything, 00:06:31.779 --> 00:06:34.980 and that's okay. Talk to a financial advisor, 00:06:35.259 --> 00:06:39.439 join investment communities, or even ask a more 00:06:39.439 --> 00:06:43.600 experienced investor for tips. So understand 00:06:43.600 --> 00:06:46.600 that being unsophisticated isn't a bad thing. 00:06:46.680 --> 00:06:50.300 It's just a starting point. Educate yourself 00:06:50.300 --> 00:06:53.620 and learn the basics of investing. Make decisions 00:06:53.620 --> 00:06:58.480 based on research, not emotions or hype. Diversify 00:06:58.480 --> 00:07:01.949 your portfolio to reduce risk. and increase the 00:07:01.949 --> 00:07:05.730 chances of long -term success. Stick to your 00:07:05.730 --> 00:07:09.470 plan and remember, as he said, investing is a 00:07:09.470 --> 00:07:12.870 marathon, not a sprint. See you on the next one.