Why is it that we live in such a rich country, yet most people are not rich?

At school we are not taught a financial education, or even how to manage cash, we were taught how to work for money but not how to make money work for us.

Also at school we were taught to memorize. When doing an exam you would study for a bit and normally memorize all your notes the night before. If you had to sit that exam a year later you would probably fail because you would've forgotten the information, so it's not really learning is it? Memorizing, and putting into practice are two different things.

For most people, they're also afraid to step out of their comfort zone to try new approaches or strategies to get what they really want in life and end up sacrificing their time and money to a cause they have no interest in. Are you dedicated enough to step out of your comfort zone and make a difference in your life?

Another reason why people won't step out of their comfort zone and have a go in life is their focus. They're not focusing on their destination, for example as Jamie McIntyre explains it, "When driving, do you focus on your destination and where you're heading or do you focus on the bugs on the windscreen?" Those bugs are related to fear and pain. When you mention investing to the un-educated or those without the right mindset, they have the fear and pain of losing money. For most people the need to avoid pain is greater than the need to gain pleasure.

Another point of mention is mindset. In particular, the mindset of the majority of people around money. Most people delude themselves when it comes to money. They think money will solve all their problems, hence the reason why many people buy lotto tickets. But look what happens to the majority of those who actually win lotto, most are worse off three to seven years later. They never had the mindset to make money work for them. They had more money than their personal development. You only have to look in some trashy celebrity magazines and you'll more than likely find a movie star, rock star or sports star stuffing up their life because they've had more money than their personal development. Mindset is 80% of what it takes to be financially independent, 20% is strategies but without the mindset you'll never implement and fully take advantage of the correct wealth building strategies.

After the last market crash, portfolio managers and strategists proclaimed that the old "buy and hold" philosophy of investing is no longer viable. They said, "the market is simply too volatile for that kind of approach. Even well-established companies can go bankrupt. The slightest bad news can cause a stock to plummet." Lately, some managers are once again investing with the prior intent of holding all positions for several years (though some do say they will sell if the fundamentals change). It is as if they have learned nothing from their recent experience. Such an attitude tends to lock an investor or advisor into a pattern of thinking that all losses are only temporary, and everything will be fine five years from now anyway.

The problem with this mentality is that it reduces vigilance. Why bother to watch a portfolio closely or even to think about strategy issues if everything will work out in the long run? What are these advisors being paid to do? We know from past experience that everything may not turn out okay in five years. We can recite a very long list of stocks that have dropped over 60% from what they were five years ago and they still have not come close to recovering (I actually named a number of these companies in another article). Many of these stocks no longer exist or are now virtually worthless.

The point is that all these stocks looked good to many of the analysts who studied the fundamentals of these businesses. There were, after all, some honest analysts who joined the dishonest ones in repeatedly recommending their purchase and who gave glowing reports about their prospects. These stocks were touted as great investments at prices that later proved to be much too high (they did not seem particularly high at the time because they had been much higher before that). Nevertheless, some of the analysts who studied these companies really believed that they were very good picks. They kept recommending these stocks even though they kept falling. Why? They did so because they concluded that these stocks ought to go higher. Technicians who study price, volume, and various other stock behavior patterns, on the other hand, sold when their stop-losses were triggered or when technical sell signals were registered. They did not argue with themselves that these stocks ought to go higher. They acted on what was, not on what ought to be. They were the smart ones.

Yes, some day these stocks may recover. However, an investor who ejected himself from these situations could have been accumulating profits during the following years rather than watching his stocks decline or hoping for a recovery some day. Those who merely hang on through "thick and thin" are the real gamblers. Contrary to their own opinions of themselves, they are not really investors but speculators guided by hopes and dreams. They have no real sell disciplines. They merely buy "good companies" and blindly hold on with no plans for selling except "someday, at a profit." It is far better to get rid of losers and to keep the winners. If you do not "weed your garden," you will end up with nothing but "weeds." If you keep pulling the weeds, your garden will have only flowers. The same is true of your portfolio. It is the percentage of time that most of a portfolio is invested in rising stocks that determines how good performance will be. Eject the losers and the winners will lift the portfolio.