12 Brutally Honest Money Truths Nobody Wants to Hear

Accepting these realities will get you started on making informed, wise investing decisions.

young beautiful woman closing eyes and blocking ears with fingers
Updated May 28, 2024
Fact checked

We receive compensation from the products and services mentioned in this story, but the opinions are the author's own. Compensation may impact where offers appear. We have not included all available products or offers. Learn more about how we make money and our editorial policies.

Every investor wants to be the next Warren Buffett, but if you can’t face up to a few brutally honest investing truths, you’re unlikely to successfully build wealth.

The following harsh truths can be hard to hear, but once you take them to heart, you’re in a much better spot to really boost your bank account. How well you follow these pieces of advice can make or break your investing experience.

Featured partner offer

4.2

Robinhood Benefits

  • Buy and sell stocks 24 hours a day, 5 days a week with Robinhood's "24 Hour Market"
  • Commission-free trading (other fees may apply)
  • No account minimum
  • Trade stocks, options, ETFs, and more
  • Earn 5.00% APY1 on your uninvested cash with Robinhood Gold, subscription fee applies
Join Robinhood here

You're not patient enough

Tiko/Adobe man holding hour glass

Every once in a while — as with the Reddit-based GameStock stock surge in 2021 — the stock market turns a handful of people into millionaires overnight. But these “rags to riches” stories are definitely the exception and not the rule when it comes to investing.

The best investment strategy isn’t to cross your fingers and hope for a random spike in stock prices. Instead, your odds of success are much higher if you make careful decisions about where to invest.

Just remember that successfully growing your wealth in this manner requires a commitment to being as patient as possible.

Want to learn how to build wealth like the 1%? Sign up for Worthy to get ideas and advice delivered to your inbox.

You'll never time the market correctly

peopleimages.com/Adobe businessman watching time on wrist watch

Nobody knows what the stock market will do tomorrow, regardless of the endless stream of pundit predictions on TV and across the internet.

Yes, you can scroll social media or follow stock market forecasts in hopes of timing your investments exactly right and scoring the biggest possible return. However, research has shown that the odds of successfully timing the market are slim.

You are better off investing regularly over long periods of time and simply waiting for the stock market to deliver strong returns as the economy grows over time.

Obsessively watching market returns is likely to backfire

terovesalainen/Adobe person reading news on smartphone

Stock prices fluctuate minute to minute, hour to hour, and month to month. Watching the stock market obsessively in hopes of getting nonstop, real-time updates may make you feel like you are in control of your investments.

But in truth, it’s more likely to keep you from seeing the bigger picture. It may even encourage you to make snap-second investment decisions rather than to act rationally based on longer-term trends.

You don’t actually need to watch the market closely to make a fortune. Investing and letting the stock market do its thing for years and decades has turned countless humble investors into millionaires.

Get a personalized financial plan to reach your goals faster

73% of Americans rank finances as their chief stress in life, according to a recent study.2 If you’re part of that 73%, J.P. Morgan Personal Advisors could help ease that stress.

Schedule your free one-on-one financial planning session with J.P. Morgan Personal Advisors,3 and you’ll get access to a team of fiduciary advisors who will create a personalized financial plan catered to your lifestyle and financial goals.

Working with an advisor may sound scary, but J.P. Morgan’s advisors are fiduciaries, so you can be confident that any advisor you work with has your best interest at heart.

Book your free financial planning session here

Social media is a terrible place for stock tips

opolja/Adobe young man using smartphone

Social media is generally one of the worst places to get good, trustworthy investment advice.

To take just one example, people who brag about their gains on social media rarely post about their losses. That means social media can give you a skewed perspective on how good or bad a certain investment might be.

Remember, when you hear just part of the story, you don’t have all the facts you need to make an informed decision. In fact, it increases your odds of making disastrous decisions based on incomplete data.

You’re unlikely to get rich quickly

1st footagei/Adobe lazy asian woman holding using laptop

Buffett hit millionaire status by the time he was 30, but that doesn’t mean his success happened overnight. Quite the opposite, in fact.

Buffett started investing at the age of 10, meaning his investments had a lot of time to grow. There is no doubt that the Oracle of Omaha is a shrewd stock picker. But it is a long period of compounding interest that really built Buffett’s wealth.

So, while reading news stories about investors who get rich quickly through crypto investments can be fun, the odds are against you successfully doing the same.

Pro tip: If your income is barely big enough to make ends meet, consider getting a part-time job or starting a side hustle. Doing so can help you generate extra income that you can invest in the stock market, providing the fuel you need to build wealth over time.

You probably trade too much

Freedomz/Adobe checking stock market graphs on monitor

Some traders claim that the best way to make money in the stock market is to closely follow market trends. That way, you can buy and sell based on whichever direction the investing winds are blowing.

However, two decades of academic research have shown that those who trade most often tend to have the worst results over time.

Once again, we turn to the wisdom of Buffett, who has famously said that his favorite holding period for a good stock is “forever.” He regularly counsels other investors not to panic and sell when the market takes a dip.

As Buffett has said, "If you aren't willing to own a stock for 10 years, don't even think about owning it for 10 minutes."

You might buy and sell at the wrong time

lumenphotos/Adobe young man stressing at charts on monitor

If you keep losing money on your investments, you might be buying and selling stocks at precisely the wrong time.

There is an old Wall Street adage: “Buy low, sell high.” But research shows that many people do just the opposite. When markets dip, they feel fearful and decide to sell. Then, they don’t buy again until markets are soaring.

Unfortunately, such an emotion-based approach is not likely to lead to success. For example, when market returns are great — and investors are most optimistic — it often means a downturn is around the corner.

Your expectations should be more realistic

Prostock-studio/Adobe young lady explaining graphs

The famed investor Peter Lynch once said, “The key organ in your body in the stock market is your stomach — it's not the brain.”

When you invest in stocks, you will have good years and bad years. And some of those bad years will be stomach-turning terrible.

Over time, you very likely will build wealth if you remain invested. But you must be realistic about your expectations. The road to riches is not a straight path. You will encounter twists and turns and fits and starts

You're chasing trends that won't take you anywhere

bongkarn/Adobe businesswomen gossiping during the coffee break

Chasing trends is common among those who have little investing experience, but one thing is for sure, chasing investing trends will not make you rich. 

Unless you build a foundation and evaluate your market, you won't be ready for what's to come, even if you manage to be the first to get in on the latest trend.

When investors follow the next hot stock without clarity on why they chose this specific investment other than because “someone else says it is awesome", which is a common way to lose all your money.

Stop missing out on potentially $1,000s of basically free money with this account

If you’re not using a high yield savings account already, we just have one question: WHY?! Maybe you don’t think it’s worth your time to transfer from a traditional savings account … but by not switching, you could be missing out on $1,000s of basically free money. Here’s why:

The Customers Bank high yield savings account offers a rare 4.76% APY4 (annual percentage yield) — compare that to national average APY of 0.45% (as of 7/22/24). This could be worth hundreds, even thousands of dollars in practically passive income.

To put it another way, in a traditional savings account with the national average APY, a $50,000 deposit would only earn $1,189 with daily compounding interest in 5 years. With Customers Bank, that same $50,000 deposit could yield over $15,200 in the same time frame.5

Open an account today — it takes minutes, and there’s almost zero excuse not to. Customers Bank is powered by Raisin, there are NO fees, and you can withdraw your money whenever you need it. Plus, with FDIC insurance, Customers Bank provides a more secure online banking experience and a safer place to store your extra cash.

Limited Time Bonus: Earn up to $2,000 when you refer friends and family to Raisin. Visit site to learn more.

Click here to open a Customer Bank high yield savings account

You're investing money you’ll need soon

William W. Potter/Adobe Saving money for house and car

When you’re ready to invest, you should have a healthy amount of cash in a savings account set aside for all your near-term goals.

The money you'll likely need three or five years from now should not be invested in stocks since the stock market tends to be volatile, and losing the money you were saving for something like a down payment on a home could be devastating.

A good way to go about this is by making sure you feel in control of how you spend your money prior to investing. A big part of that is building a cash reserve so you don’t need to rely on your investments when you run into an emergency or want to make a certain purchase.

Your investing goals are not clear

Drazen/Adobe man thinking about finances while working on laptop and notebook on couch at home

You should see money as a tool for meeting other goals, not simply a way of looking to make more money.

When thinking of your investment goals, first consider how they intersect with your life plan. Then, realize they will generate accountability by forcing you to review progress on a periodic basis, invoking discipline when needed to stay on track.

A good way to start is by writing down the list of each investment goal and how you’ll measure progress. It's important to remember that the design of your portfolio and performance should be aligned to meet your goals—not an index that doesn’t know your financial situation, goals, or time horizon.

You keep delaying investing altogether

Drobot Dean/Adobe scared young businessman

Maybe you're scared, maybe you're waiting for things to be perfect, or maybe you're being wise.

Just remember the choice to never invest at all is also a costly mistake. Keeping all your cash in your bank account means that your money is losing its purchasing power, which is directly connected to the rising rate of inflation.

if you find yourself overwhelmed, it’s best to work with a licensed financial planner to give you the tools needed to invest with confidence.

Bottom line

Studio Romantic/Adobe african american woman putting coins in piggy bank

Investing is all about growing your wealth steadily over decades. You’re much more likely to make extra money and retire comfortably if you face up to the financial truths of your situation, no matter how hard or uncomfortable it is to do so.

Dealing with financial realities head-on will help you formulate a much more realistic plan for using the stock market to make money so you can retire early or achieve any other important financial goal.

4.2

Robinhood Benefits

  • Buy and sell stocks 24 hours a day, 5 days a week with Robinhood's "24 Hour Market"
  • Commission-free trading (other fees may apply)
  • No account minimum
  • Trade stocks, options, ETFs, and more
  • Earn 5.00% APY1 on your uninvested cash with Robinhood Gold, subscription fee applies
Join Robinhood here

Author Details

Michelle Smith

Michelle Smith has spent a decade writing for and about small businesses. She specializes in all things finance and has written for publications like G2 and SmallBizDaily. When she's not writing for work at her desk, you can usually find her writing for pleasure near large bodies of water.