The Way of the Sober Investor

While the market grows by an average of 10% annually, the typical investor earns just 4%. Most people believe that to succeed in the market, you need insider information on hot stocks, luck, or a large starting capital. In reality, they fail because they lack the proper mindset, a solid plan, and—most importantly—a good filter for incoming information.

That’s why most of us, when approaching the topic of investing, need to start by “cleaning the room”: getting rid of harmful beliefs and replacing them with a completely new mental framework. Here is where the house cleaning begins:

When Fiction Becomes Financial Advice

Open X or YouTube, and you’ll be bombarded with stories of “1000X gains”, invitations to signal groups, and crypto millionaires with their lambos luring you with the vision of passive income from trading.

The reality? Studies consistently show that over 90% of day traders lose money. The rare “success stories” you see usually fall into two categories: lucky gamblers who haven’t lost yet or share only their wins (but not the losses), course sellers who make more money from teaching than trading.

Successful traders exist. They rarely share their trades on social media. They don’t earn 20% a month. Results are not consistent, and much more humble. To live out of it, you need to constantly risk capital, and maintain elite level of discipline and learn to function with a certain baseline of stress.

The question is: why do you invest in the first place? Do you want to live your life watching the charts many hours a day? Enduring losing months, because “statistically eventually you’ll win”? If earning your capital took you a few years, do you have enough time so you can afford to risk losing it?

You should always be skeptical about financial influencers, so a little disclaimer:

When I talk investing, I don’t offer shortcuts that will make you rich overnight. No trading signals, sorry. 90% of what I share is timeless investing knowledge that works surely but slowly, and the remaining 10% are my personal bits that you can take with a grain of salt.

Don’t Drive Drunk

I’m sure that while picking a car that will be your daily driver, you don’t think about the maximum speed as the main factor to consider. You would rather think about comfort, safety, and cost efficiency. Think about getting rich the same way: It’s a long haul, and your strategy—the vehicle to get you there—should be picked with the same mindset. You don’t want to drive drunk, or emotionally shaken, and you don’t want to test the speed limit of your car on the way home.

That’s why I always recommend collecting cash savings to cover 3-6 months of your daily expenses before you start putting any money in the market. You should really aim for 1 year, but we can get there slowly. Since most of us start building portfolios by monthly dollar-cost averaging, and the capital at risk also grows gradually, you can go for a “hybrid” approach putting half of the money in the market, and half in the savings account until your cash balance reaches the target.

Whatever you choose, having an emergency fund is crucial.

It’s getting sober before sitting behind the wheel. You can’t make rational investing decisions when money is a point of high tension in your life. Having this layer of security gives you peace of mind that removes a lot of anxiety that would otherwise interrupt your process. Without it, you’re always one unexpected expense away from being forced to sell your investments at the worst possible time. This is the way to sabotage both your results and confidence to make good choices in the first place.

On the other side, enduring the urge to go all-in fast, is a mental workout you’ll benefit from in the years to come. Investing is a long road trip, not a race. The market will test your patience countless times throughout your journey, so building this muscle strong from the beginning is how you set yourself for success.

Trendy Assets Are Opportunities of the Past, Not the Future

The market often makes an impression that there is some lifetime opportunity that will never repeat itself. Bitcoin at $100, Tesla pre-split, AI stocks in 2023… it will never end. The global economy has been growing and creating new opportunities for centuries. While people regret not buying Bitcoin early, Tesla and Nvidia have made 10X returns for investors in a single year. Calm down. No, it’s not the last chance.

The real lifetime opportunity isn’t catching the next moonshot—it’s starting to systematically harvest this consistent growth of the global economy that is not even hiding. It’s right there, offering its 10% annual returns, waiting for us to stop chasing ghosts and start building real wealth.

Boring Makes Money. Exciting Is the Way to Lose It All.

Unfortunately, nobody gets into investing because they’re excited about earning this 10% annually. We come for the thrill of doubling our money, for the rush of catching the next big thing. What I’ve learned over and over again is that simply telling yourself “don’t get excited” rarely works. Some of us are just wired to easily get excited.

The most reliable way to deal with this “deficiency” is keeping 80-90% in the boring core portfolio where we DCA into not-so-sexy common-sense assets, while the remaining 10-20% becomes a playground for all the amazing ideas that come after watching too much financial YouTube. Who knows, maybe you’re an investing genius and those ideas will really work out, but life is too short to risk losing a few years of steady compounding effect that the “boring” approach has to offer.

“I Don’t Have Time For 10% a Year”

I have 15 year till retirement, I put my number into the compounding interest calculator, and at the retirement age I’m still poor. 10% a year is too slow.

I’ve heard this story many times. After all, this is what brings people to Bitcoin. Rightly so! In the last 4 years, the annualized return of Bitcoin was 60%, and I am with Michael Saylor who believes that in the next 20 years, it will continue to be higher than S&P 500. Saylor estimates an average of 25% which would offer an unmatched compounding effect.

Here is the problem, this anxiety-driven mindset set people to failure. Instead of just DCA-ing into Bitcoin, which in the last 4 years tripled your money, they “go bigger” chasing memecoins, and daytrade trying to catch tops and bottom. In the end, instead of beating the “slow” 10% a year, they more often than not, manage to lose money… and effectively go backward.

To sum this up, I have a story:

A Tale of Two Investors

Tom and Sarah both started with $10,000 in 2020. Tom, excited by social media hype, jumped into day trading crypto and meme stocks. He caught some early wins, doubling his money in two months. Encouraged, he went all-in, eventually trading with leverage. By the end of 2021, after a series of bad trades and emotional decisions, his portfolio was down 70%.

Sarah took a different approach. Sarah is a sober investor. She built a six-month emergency fund first, then started monthly investments into broad market ETFs. She put 15% of her portfolio into Bitcoin. When the market crashed, while Tom was forced to sell at a loss to cover expenses, Sarah’s emergency fund kept her calm. She continued her monthly investments, even buying more during dips.

Today, Tom is a bit discouraged from investing. He still keeps the remaining $3,000 in a “diversified crypto portfolio” hoping for altcoins to catch up with Bitcoin, while Sarah’s portfolio is worth over $40,000 (yes, the described portfolio experienced +300% since 2020). You may not believe in Bitcoin, but Sarah took controlled risk. Even with Bitcoin going to zero, Sarah would still end up with $17,000 (+70% growth).

I’ve been both Tom and Sarah in my life, so you don’t have to.

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Disclaimer: This article is for informational purposes only and does not constitute financial advice. Investing involves risks, including the possible loss of principal. Always conduct your own research before making investment decisions.