developing an investor mindset

Develop an Investor Mindset (Your 6 keys to successful investing)

Have you ever felt excited to see the value of your investment portfolio going up, only to feel sad and scared the very next day when you watch it go down? 

Well congratulations, you’re normal. We’ve all been there.

During her podcast with me, Gabrielle from the Corporate Quitter podcast highlighted this common struggle among new investors.  

She simply asked “how do you develop an investor mindset”…and not sell everything? 

The question surprised me a little. But I’m not sure why the question took me by surprise. 

When the market was crashing in 2008, young Theresa (that’s me, as a new investor), withdrew everything and stuck it in a savings account. Here’s the link so you check your losses too. 

Cue the violins and the tears…this little mistake cost me almost $24K over the last 13 years. Had I kept the $10K invested, I would have $34K now. But looking a little more into the future with my crystal ball, I see that I would have had $374K when I turn 65. All from just the $10K withdrawal I made when I was 28 years old.

Ultimately that withdrawal cost me a hypothetical $364K. Imagine if I had kept that original $10K in the account and added just $250 a month for the next 38 years until I turned 65…I would have more than $1.4million by age 65. The numbers are crazy. 

But don’t worry. I am a firm believer that while it does cost more to catch up later in life…it’s still possible.

To hit the $1.4 million target by age 65 given my current age of 40, I would need to have about $129,214 in investments with an average return of 10%. While I don’t have $130K in the stock market. I do have more than $200K worth of value in my rental properties and nearly $100K in the market. So I’m doing alright.

But all that is for another story. My mission is to hit a much bigger number at a much younger age.

Yes, it’s a little sad when we miss out on opportunities and money. But we can’t change it and I have certainly learned from it.

It’s just part of the game…I guess. 

Where would you be if you had everything now?

Think about it…if you had what you thought was enough “to be rich” (ie. a millionaire), would you be striving for more? 

I’m not sure I would be working on this blog and building generational wealth if I thought I already had enough. 

Mistakes and failures often lead to monumental successes. So now is our time because we all know $1 million isn’t going to get us through life if we want to retire early. 

If you haven’t already determined how much you need to retire, be sure to check out this article by John at Financial Freedom Countdown.

So back to my response to Gabrielle. I think I said something like…you just do. And I’m sure I talked about remaining calm and educating yourself. 

But there really is more to it.

So, what is an investor mindset?

I would define an investor mindset as a set of beliefs that shape how you see the stock market and invest. These beliefs ultimately influence your investing behaviors. 

If you believe the sky is falling, you might never go outside.

If you believe the market is always crashing, you might never invest.

If you believe the market always goes back up, you might keep adding to your positions.

Let’s get started with the 5 steps below to develop an investing mindset.

Go on a self-reflection journey to discover your beliefs about investing and your personal why.

Take a moment to determine what you think about the stock market.

Do you think real people can be successful investors without a college degree or a financial/investing background? 

Do you think it is all one big ponzi scam?

I want you to take a moment…what do you think about investing?

Do you picture the stock market as a bunch of people running around the New York Stock Exchange screaming or do you see a 35-year-old young woman checking her investments during her lunch break on her iPhone?

Have you had a bad experience investing? What could you have done differently?

As for me, I believe the stock market is an opportunity for everyday people to invest in companies that they want to own and over time their investments increase in value (sometimes they don’t).

Some company values increase fast and others slower. Some companies reinvest earnings back into the company, while others give earnings to shareholders through dividends.

Every stock and every company is just as special to every investor as every child is to a parent.

Yes, people can lose money. But if you invest in companies that you believe in and do the research to make sure it is a wonderful company, you’ll make more than you will ever lose in the long run.

Bonus exercise: Discover your personal why. Why do you spend the extra hour studying and reading about the stock market and investing? What are your life goals? Why do you want to invest?

Spend wisely

Investors spend wisely. They have to. Otherwise, there’s nothing left to invest.

Sanjana Vig from The Female Professional says that keeping our personal spending in check is a must to help us to spend wisely. 

Focus on having a budget and not wasting money on the little things. You don’t have to make a million dollars a year to make a million dollars. But you have to have money to make money. 

Imagine skipping dinner out and taking that $50 and putting it towards your favorite stock. Imagine how empowered you’ll feel.

Next up…let’s talk about our emotions.

Be calm and patient. This is a game for the long run.

The stock market is filled with a lot of people just like you and me and many of them do not have the best investor mindset. More days than not I’m convinced the stock market is irrational. 

But it’s ok. We just have to remain calm and rational. 

You will see many investors selling stocks every time something happens in the world.

And then you will see others who will only buy stocks when everything is on sale because something is happening in the world.

I want you to find a healthy, happy medium. Remember this is a long-term game. We invest for at least 5-10 years. Not a month or two…let alone a day or two. 

Be calm and patient. Practice patience. You will be tested later. Because the calmer you are, the better decisions you’ll make.

Bottom line: This is a long-term game. Be calm and rational. This too shall pass…no matter what happens….it will pass.

Accept that you will have losses

It’s normal for people to not want to lose money. The severity of how sad we are when we lose money, greatly exceeds how happy we are when we win money. 

But the harsh reality is that you are going to lose on some investments.

The value of your portfolio is not going to be a straight line to the moon. And I’m not just talking about the day-to-day ups and downs. 

I’m saying that over time some of your investments may be duds. You may have some investments that lose money over a year, two, or three (especially if you don’t have a good exit strategy).

Take a look at these two images below. When you zoom in and you’re in the midst of the clouds your investments may not seem like they’re doing anything. But if you zoom out and look over time, you see nothing but an upward trend.

develop an investor mindset
Pictures take from Yahoo Finance

Do not invest anything you are not willing to lose or at the very least that you do not need for the next 5-10 years while you recover your losses.

It takes twice as long to recover from a loss. In the words of Warren Buffet: “Rule one…don’t lose money. Rule two…don’t forget rule one.”

The ups and downs are just part of the game. You have to learn to let it not bother you as long as the lows are getting higher and higher over time (that’s an upward trend).

Prices tend to go up when you have more buyers than sellers and the price tends to go down when you have more sellers than buyers.

The key is recognizing that the price will go back up for most stocks (especially if you’re doing your research).

It’s the tiny gains that matter the most in the long run.

For me, I’m ok if a stock stays flat for 5-10 years… this just gives me more time to add to my position for when the stock is ready to rally higher.

The best way to be OK with losses, is to know the why’s behind your investing decisions and trust your plan. 

If you know why you picked a stock and you have a solid plan, you’ll be less worried about the red (down) days.

Bonus exercise: Focus on the stock positions that you can add to during the red (down) days. The more shares you can buy now, the more shares you will have later…hence, the more money (value) you will have when you’re ready to retire or maybe travel the world.

Create a positive inner circle

Jim Rohn once said, “you are the average of the five people you spend the most time with.” 

What are your friends doing? What are they saying?  

Your inner circle will influence your thinking and behaviors. 

Be mindful of what you are sharing with other people. Yes, you do want feedback from others. But you also don’t want to be held back.

Embrace an alter ego that is calm, confident, and optimistic. 

I’m not saying to be arrogant or overly cocky. I’m saying make sure that you understand what you are doing and why…then stick to it.

It’s that easy.

Process what people tell you. But ultimately make decisions that are best for you.

People will have a lot of opinions as you start to change your investing habits. Don’t let others influence you in the wrong ways. 

Bonus exercise: Who are the 5 people you spend the most time with? Are they on the same path as you? Can you talk to them openly about your money and investing? If so, great! I hope that you lift each other higher. If not, maybe add a new friend to the circle and work on the other 5. 

Be a lifelong learner of many things

Knowledge is power. And the more you have, the better decisions you will make.

Warren Buffet says that “risk comes from not knowing what you are doing.”

Don’t try to save the world without knowing what’s going on. Arm yourself with a little knowledge first. Then you can make better decisions.  

You got this!

Now get out there and build your investing and financial knowledge TODAY.

Here is a great list of 12 investing books for beginners to start reading now from Just Start Investing.

Or check out a few investing blogs like the Motley Fool or Investing with Rose. I also like to recommend a rising superstar You-Tuber The Wallstreet Trapper.

Stay abreast of world news to see how it may affect your investments. If you hear that one of your companies is going to be do something amazing, you just might want to invest a little more to increase those long-term profits. 

Just remember, the market tends to be forward-thinking. You may see the market up while the economy is down for this very reason. Investors are immersed in what is going on today, to determine what is going to be going on tomorrow. The present is here and we’re changing it with every second. We have to see a vision for the future to get ahead.

Bonus content: For those of you that are going to complain, you have more time than you realize. Start using a daily checklist and a calendar. Listen to podcasts while getting dressed in the morning or driving to work. It’s time to just get it done.


Forget about investing if you don’t have the right mindset and your finances in order. These tips should get you started the right way to develop an investor mindset. 

And be sure to check out my simple budgeting tool to get you started on your budget. You can thank me later. There’s no better time than right now to take a look at your finances and start spending wisely.

If you would have seen me investing over the last 20 years, you would probably say that I have multiple personality disorders when it comes to managing my money and investments. I have had my highs, my lows, my optimistic days, followed by the pessimistic ones.  

But what separates me from the rest is that I am learning from the past and making better decisions because of it. I have a goal and a plan to get there.

Sure I still have my days filled with a little fear of missing out and fear of losing everything. 

But those days are far and few. Overall, I feel amazing as an investor and look forward to green and red days in the market.

When I think back to determine why I panicked and withdrew everything in 2008…all I can say is: I didn’t trust the market. I didn’t have an investor mindset. I had a poor me mindset. I had an I want to be rich today mindset. I had an I know better than everyone else mindset…because after all, I was 28.

What I can tell you, is that I’m better for it with a much different investor mindset.

As you work to develop an investor mindset, you will see that you are on a journey of self-discovery and it can be pretty empowering.

Comment below…where are you on developing an investor mindset?

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Theresa is a personal finance blogger. She writes content for busy professional women to take control of their money and investments. She enjoys reading, traveling, cooking, and writing. Her work has been featured on GoBanking Rates, Your Money Geek, Savoteur, the Corporate Quitter, Thirty Eight Investing, and more.