Growing up, money was always scarce in my household. My parents worked hard but never seemed to get ahead financially.
As I entered adulthood, I was determined to break that cycle and build real wealth for myself through investing.
However, I quickly realised that the conventional path to wealth creation was not working for me.
I made mistake after mistake, falling for get-rich-quick schemes and trying to find some “secret formula” to success.
After years of frustration, I finally understood the key principles and mindset required to build sustainable wealth as a self-made investor.
In this article, I want to share the hard-won lessons from my investing journey over the past two decades. These are the core insights I wish someone had explained to me in my 20s.
I hope they will help set you on a faster path to financial freedom without the costly missteps I made along the way.
Lesson 1: Be an Investor, Not a Trader
When I first started investing, I didn’t understand the crucial difference between being an investor and being a trader.
All I cared about was making quick profits through hot tips or market timing.
But over time, I realised that traders try to make short-term gains by constantly buying and selling assets.
Investors take a long-term approach, buying quality assets and holding them for sustained growth over 5, 10, or 20+ years.
Once I shifted to an investor mindset, it was life-changing.
There’s far less stress when you’re not obsessed with day-to-day price fluctuations.
You avoid high transaction costs from excessive trading, and you benefit immensely from the power of compound growth over long periods.
This distinction seems obvious in hindsight. But when you’re young and hungry for success, it’s easy to get sucked into the trader mentality.
I wish someone had clearly explained these two approaches much earlier in my journey.
Lesson 2: Buy the Highest Quality Assets You Can Afford
Since money was tight when I started, I always looked for the cheapest possible investments.
I didn’t pay enough attention to the underlying quality of what I was buying.
But I eventually realised that “trying to save money” on investments is hugely counterproductive.
Higher-quality assets perform better over time and require less maintenance.
For example, one of my first rental properties was an inexpensive unit in a run-down building.
I dealt with high tenant turnover, maintenance headaches, and prolonged vacancies.
A slightly more expensive but higher-quality property would have saved me thousands in repairs and rent losses over the years.
Of course, you need to buy assets that are affordable for your income level. But within your budget, prioritise quality.
This applies to every type of investment, whether stocks, real estate, or anything else.
The bitterness of poor quality remains long after the sweetness of a cheap price is forgotten.
Lesson 3: Time Does the Heavy Lifting
Early on, I constantly stressed whether I was making the right moves or progressing fast enough.
I thought I needed to find some magic investing “edge” to get rich quickly. In hindsight, this was foolish.
Building wealth is a long game of small, smart choices compounding over decades. There are no shortcuts.
Consistent efforts over time are the “secret” no one tells you.
Once I internalised this lesson, it was incredibly freeing.
I stopped panicking about my next “big move” and just focused on staying disciplined year after year.
Amazingly, you end up wealthy through sheer osmosis if you stick to sound principles over the long run.
Lesson 4: Keep It Simple
With investing, I’ve always suffered from “shiny object syndrome”.
I frequently jumped between different tactics and asset classes, searching for bigger or faster profits.
But over time, I realised simplicity is best.
Choose a focused investing approach you understand well and can stick to for the long-term.
Endlessly pursuing the next hot investing trend just leads to poor decisions and diluted results.
These days, I tell new investors to explain their strategy in a way that a first-grader could understand.
If it’s too complex for that, there’s likely something wrong.
Wealth building doesn’t need to be exciting or clever – it just requires discipline.
Lesson 5: Build Capital First, Then Focus on Passive Income
When I started, I was seduced by the concept of “passive” income.
I wanted to earn money without effort through magic assets that generated cash flow automatically.
In reality, there are very few truly passive income assets, and it’s quite difficult to build them from scratch.
I spun my wheels for years, jumping between different passive income schemes that went nowhere.
Over time, I realised the smarter approach is to first build your capital base through assets focused on growth – primarily stocks and real estate.
Once you have sufficient capital accumulated, you can shift your focus to assets that produce passive income to live off.
While not as glamorous, systematically building your net worth first creates the strongest foundation for generating passive income down the road.
I wasted a lot of time trying to do both at once rather than following this two-step process.
Key Takeaways
Looking back, these five lessons represent the key mental shifts that set me on a much faster path to financial freedom:
- Be an investor, not a trader – take a long-term approach
- Buy the highest quality assets you can afford
- Recognise that time and consistency create wealth
- Keep your strategy simple and avoid complexity
- First, build capital, then pursue passive income
I hope these lessons from my own investing journey are valuable in steering you towards wiser decisions and better results.
If you invest with discipline over decades, you will reach financial freedom – I’m living proof of that.
Stay focused on the long game, and don’t get distracted by fads or speculation. Your future self will thank you.
