This is the action bias: look active, even if it achieves nothing. There are many situations where we do not know what will happen but we just act to show our active behavior in eyes of others.

When penalty kick in football kicked to goal. The goalkeeper just has 0.30 seconds to think where the ball will fall right, left, or center. It is difficult to guess in much less time so they jump either side which creates an illusion of doing something to stop the goal.

Investment – Similarly, when a fund manager knows that he cannot beat the market, then many fund manager keeps on churning stocks in a portfolio or they keep on buying one and other stocks which creates an illusion among their clients of doing something to beat the market and create wealth. Also, I have seen many fund manager who keeps many books with them so that when clients meet them, they can just create an illusion of avid reader.

‘All of humanity’s problems stem from man’s inability to sit quietly in a room alone,’. We need to learn the skill of patience because we cannot produce a child in a month by doing sex with nine women or with the same woman nine times a month. When the situation is not suitable with our philosophy and process then we have to keep patience to wait for the loose ball to hit a home run. We do not need to hit a home run on every ball and if we try to do that then remember, we cannot survive till a loose ball comes for a homerun.

This entire series will be reviewed with various examples from books which are Thinking, Fast and Slow and The Art of Thinking Clearly.

Step 3: Know the Difference Between risk and risky

Business and investing are not risky, but being under-educated is.

We are always taught in our school, family that business and investments are riskier so that we should stay far from it. But no one taught to build wealth, manage risk, and financial literacy.

Proper cash flow management can help us to go out of the rat race and debt trap. People not going for investment by considering it risky but when we are financially uneducated then that creates more risk to us. We have to understand what actual risk is. After the proper education, we can generate income from our assets as well as build more assets from income also. This will help us to attract fortune and financial freedom in our life.

When we write down our fears and work on overcoming them, then it will help us to grow fearlessly. Knowledge is the only option to grow substantially from any of the situations. We should start with scratch, learn about the various assets class, experiment small portion in all of them to find out which assets class suits our temperaments. After that start learning about mistakes made by others which helps us to stay one step ahead. Be ready to make mistakes and learn further from them.

Kindly check out mistakes and learn from well-known investors.

Bibliophile: Big Mistakes

Read for more detail: Rich Dad’s Cashflow Quadrant: Guide to Financial Freedom

Wish you all a happy and prosperous new year. Have a healthy and wealthy new year.