The Daily Buffett

← PreviousIndexNext →

The Hidden Costs

August 3rd

Investors should remember that excitement and expenses are their enemies

Warren Buffett

Investing can be a whirlwind of emotions, especially when we're drawn to the prospects of quick gains. Yet, as with most things, succumbing to this excitement often results in decisions that are hasty, not thoroughly thought through, and potentially detrimental to our financial health. This excitement isn't a friend; it's an adversary, blinding us from the potential risks or obscuring the true value of an investment.

Likewise, the costs associated with investing—broker fees, transaction costs, and opportunity costs—often go unnoticed in the heat of the moment. These expenses can significantly diminish profits, turning what seemed like a profitable opportunity into a financial burden. These costs, though frequently overlooked, are as much of an enemy to an investor as impulsive decision-making.

The solution lies not in chasing the thrill of the moment but in calculating and understanding the costs of your investments. It's not about neglecting the excitement entirely—after all, investing should be engaging—but about ensuring it doesn't distract from prudent financial practices. It's about appreciating the 'boring' aspects of investing: the research, the waiting, the cost calculations—because quite often, they are what make the real difference in successful investing.

Join the newsletter to get the daily reflection delivered to your inbox.

Copyright © 2023 by Scott Sansovich