For you who are a trader and live from the "buy and sell" in the market, it may seem counterintuitive, but the truth is that to build real wealth, as billionaires do, the strategy of buying and quickly selling assets is generally not the most effective. On the contrary, their game is quite different: buy and invest for the long term.
Why is "day trading" or "swing trading" not the path of billionaires?
Think about this: every time you buy and sell, you have to pay transaction costs (brokerage, fees), and if you make a profit, you still pay income tax. These small bites, added up over several transactions, erode your gains. Furthermore, the short-term market is extremely volatile and unpredictable. You may have a good day, but it is very difficult to have consistency and exponential profits in the long run with just this strategy.
The adrenaline of trading is undeniable, but the truth is that most people who try to live exclusively off short-term trades end up losing money or obtaining mediocre returns after deducting costs. It is no coincidence that statistics show that most day traders lose money.
The secret of billionaires: long-term investment
Billionaires do not spend hours in front of the screen tracking every tick of the market. They think in decades, not in days or weeks. Their strategy is to invest in quality assets (stocks of solid companies, real estate, well-managed investment funds, etc.) and hold them for a long time.
This works for several crucial reasons:
* Power of compound interest: This is the true secret. Instead of cashing out profits, they reinvest. The money you earn goes on to generate more money, and this cycle repeats, creating a financial snowball that grows exponentially over time. It's like planting a small seed and letting it grow into a gigantic tree.
* Fewer costs and taxes: Fewer transactions mean fewer fees and less tax on each sale. In some cases, such as with stocks held for a long period, there are even tax benefits or exemptions.
* Intrinsic growth of assets: Solid companies tend to grow, innovate, and increase their profits over time, which appreciates their stocks. Investing in real estate in good locations also tends to generate appreciation and rental income.
* Peace of mind: Not having the pressure to predict the market's direction every minute frees up time and energy for other activities. They can focus on their businesses, their families, their passions, while the money works for them.
Think of Warren Buffett, one of the greatest investors of all time. He is famous for investing in companies he understands, with solid fundamentals, and holding them for decades. He is not worried about daily market fluctuations, but rather about the long-term value that the company can generate.
Therefore, while the thrill of short-term trading can be addictive, if your goal is to build lasting wealth and follow in the footsteps of the great names in the market, the shift in mindset is crucial: focus on buying to invest for the long term. This is the true path to wealth accumulation.