An early retiree quizzed 100 millionaires about their biggest money mistakes and discovered nearly all of them fell into the same trap

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John, who runs the personal-finance blog ESI Money, has spent the past few years interviewing millionaires.
During his conversations, he discovered that millionaires aren’t so because they managed their money perfectly. Even the wealthiest among us made mistakes along the way.
He said the most-cited financial mistake among millionaires had to do with investing.
John thinks many high-earning people, including himself, can fall into a trap: thinking that, because they’re successful in other areas of their lives, they must be great at investing, too.
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Wealthy people don’t all have perfect track records of money management. In fact, it’s rare.

John, an early retiree who runs the personal-finance blog ESI Money, interviewed 100 millionaires over the past few years and discovered that these high-earning individuals are quick to admit their financial mistakes.

John wrote in a recent blog post that the top-cited money mistake in his conversations was related to investing. Despite previously finding millionaires’ favorite investment strategy to be surprisingly simple — they overwhelmingly favor low-cost index funds — it seems their paths were admittedly fraught with error.

"In some ways, these could be considered a trap for the wealthy/high-earning individual," John wrote. "Consider this scenario: You do well in one area of your financial life (like your career/income), so you begin to think you can do well in all areas. That’s when you start to invest in this, that, and everything else … and generally lose money."

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Many of the millionaires said they wished they wouldn’t have tried their hand at individual stock-picking — "Hot stock tips never were hot." Others were too confident in their own management skills — "A few years ago I had $20,000 in disposable investment income in my registered accounts. I was managing it myself and made some silly mistakes with Blackberry and lost half of it."

John, a millionaire himself, wasn’t "immune to these issues" either and said he also went through a phase of overconfidence, thinking he knew better than the professionals.

Some of the interviewees regret holding on to bad investments — "The primary mistake I’ve made has been not adhering to some of my trading tenets about cutting losses early. Nearly every time, the losses grow and you end up cutting much later."

Another millionaire wishes they realized earlier what it means to take reasonable risk — "I used to think borrowing money to invest in real estate was risky and I should only buy when I have saved up all the money to buy. Only after I purchased my second building did I realized that taking a reasonable risk by borrowing money is necessary when investing."

At the end of the day, many of the millionaires came to the same realization that successful investing isn’t defined by immediate gains.

"It is true what the fable about the tortoise and the hare taught us," one millionaire said. "Slow and steady wins the race. Life isn’t a 100 meter dash. It’s a marathon."

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