The Four Stages To Consistently Profitable Investing

Stage 1 Investing: You begin with “unconscious incompetence” because you don’t even know enough to know what you don’t know.

Everything is new to the beginner causing anxiety and risk of failure because so much is unknown.

As a result, you usually rely on the investment advice of others. Investing at this stage is marked by no investment plan, inconsistent profits (or even losses), and little concept of how to be on the path to wealth.

“Financially oblivious” is an accurate term to describe this stage. Anecdotal evidence suggests 60-80% of the population is stuck in Stage 1. How about you?

Stage 2 Investing: You’ve progressed to “conscious incompetence” when you’ve learned just enough to know how little you know.

You’ve taken your first steps forward by saving and investing passively, but realize there’s so much more to becoming consistently profitable.

You have the desire to build wealth and play the financial freedom game, but active investing skill and knowledge are still missing. Risk management isn’t even part of your game plan.

Your portfolio losses and gains feel out of control and have no relationship to anything you feel responsible for.

You don’t even know enough to know why you’re profitable sometimes, and unprofitable others. You blame it on things like tough market conditions, the Federal Reserve, your broker’s investment advice, or other causes outside yourself.

At this stage, you’ve entered the road to wealth, but you still have a lot to learn.

Discover the 4 levels of profitable investing, see where you rank, and find out how to excel.
Stage 3 Investing: “Conscious competence” occurs when you know enough about the investing game to get comfortable, but you still have to work at it because you aren’t a master.

This stage is marked by a solid investment plan and execution based on proven principles that lead to success. However, you haven’t mastered the intricacies of your particular investment approach and/or the approach isn’t grounded in risk management.

This causes occasional blunders and losses that could be avoided with greater experience and skill. Your portfolio has reasonable return characteristics, but occasionally experiences undesirably large losses.

These are disconcerting, and point to the next level of knowledge to become consistently profitable.

Stage 4 Investing: “Unconscious competence” is the final stage of knowledge where you know the subject so well it’s become your new comfort zone.

Investing has become primarily an administrative task, and you only seek investment advice from others for factual information. You don’t base your investment decision on their advice.

You’re truly “financially independent,” regardless of your current net worth, because your financial situation is no longer dependent on anyone else.

This stage is characterized by someone who has mastered risk management and knows the intricacies of several non-correlated investment strategies to create a consistently profitable portfolio through all market cycles.

Your wealth is just a matter of time.