The Wealthy Mindset Tango - Practice Makes Perfect

Photo: ABC


I am absolutely hooked on the TV show "Dancing With The Stars" and love to watch how celebrities transform from stumbling lead foots to gliding gazelles. It's not easy being criticized brutally by the judges every week and then being subjected to elimination. R&B heartthrob Mario has been the most recent recipient of barbs from the judges.

Although many of the contestants are considered B-list performers they subject themselves to the ridicule recognizing exposure can reignite their careers. They take the risk because the potential rewards are so great.

This is also true when it comes to your finances.

The current state of affairs in the economy may look bleak -- falling home values, mortgage industry instability and volatility in the stock market. However, wealthy people understand that it is during these times that opportunities present themselves. ...

Having a wealthy mindset means finding opportunity in the chaos and recognizing that this too shall pass. For those of you who have been singing the I'm gonna wait song -- I'll wait til' home prices fall or I'll wait til' stock prices go down, your time has arrived.

And yet what I know to be true is that when markets decline people are less likely to invest because the fear of losing is what prevented them from taking action to begin with. The inability to take risks is what prevents most folks from achieving their dreams and ultimately their ability to create wealth.

If I'm walking down your street right now here are some strategies you can use to increase your risk tolerance without losing sleep at night

Wealthy Mindset Tip #1 Practice makes perfect.
On the program Dancing With the Stars they allow you to observe the stars learning the routines and it takes hours of practice. You can use the same approach to learn how to invest. You can establish a model or what I like to call a practice portfolio. Visit www.money.com to set up your own portfolio. You can research stocks and watch how they perform without risking your money. As you acquire more experience you will gain the confidence to make an actual investment.

Wealthy Mindset Tip #2 Set it and forget it.
Invest small sums periodically in order to take advantage of dollar cost averaging. If you are investing through your retirement plan at work through payroll deduction you are already using this method of buying shares of stock or mutual funds at various prices and minimizing your risk of buying the highest levels. In other words, you don't have to think about when to make a purchase and it becomes a habit that can pay rewards over time.

Wealthy Mindset Tip #3 Hedge your bet.
One of the most difficult decisions to make is when to invest a lump sum of money from a windfall. It's a good idea to invest a portion and to set up the same type of periodic investment plan in tip#2. If you are investing for the long term but are afraid of what can happen in the short term many investment companies will allow you to set up systematic withdrawals from a money market fund and direct them into other stock funds at a specific time of the month. This method will also allow you to average your costs and prevent you from forgetting to invest altogether.

For our 15th wedding anniversary my husband purchased dance lessons.

The first few sessions were deadly as we tripped over each other's feet and then laughed because we thought we were really good dancers. After several weeks with a professional instructor and several hours spent practicing on our own we were able to strut our stuff on the dance floor. No risk, no reward.