10 Things Builders of Asset Wealth Absolutely Do Not Do

When you read books about investing, they usually describe “the things you should do.”

Invest regularly. Diversify. Hold for the long term. Choose index funds. All of these are correct. Yet there is a reality that many people who know what they should do still struggle to grow their assets.

Why is that?

One reason is that they don’t know “what not to do.”

Even if you are doing the right things, if you are also doing wrong things at the same time, your efforts cancel each other out. If you are saving 30,000 yen every month while at the same time losing the same amount in leveraged FX trading, you may feel like you are making progress, but you are actually back to the starting point.

Today’s article is not about the things you should do. It’s about what successful people in asset formation have consistently said they “never do.”

First: trying to predict the market

One of the things successful asset builders almost never do is try to predict the market.

“Is now a good time to buy?” “Will there be a crash soon?” “When is the ceiling for this stock?” They did not spend time and energy on such predictions.

Because no human can predict the short-term movements of the market accurately. This is not a harsh statement, but a fact. Of active funds managed by professional fund managers worldwide, less than 20% consistently outperform the market over the long term. Even professionals struggle to read market movements.

Still, many individual investors feel they can read the market and repeatedly buy and sell based on predictions. When a prediction happens to be right once, they mistake it for talent. But in the long run, the accuracy of such predictions is usually no better than luck.

What successful investors did was stop predicting and let the system operate. Invest a fixed amount on a fixed day each month. Do not change regardless of market conditions. This removes the need to answer “Is now the time to buy?” And only those who let go of predictions can be free from emotions.

Second: selling during a crash

The biggest turning point between those who fail and those who succeed in asset formation is how they act during a crash.

When a crash comes, many people become scared and sell. During the 2020 Covid crash, when the Nikkei average fell by more than 30%, many individual investors panicked and sold their assets, then watched the swift rebound and rise with their fingers in their mouths.

People who succeeded did not sell. On the contrary, some saw the price as “low” and increased their contributions.

This isn’t about courage. It’s about understanding.

If you are saving for your retirement 30 years from now, a 30% drop in stock prices this year does not prevent you from achieving the goal in 30 years. If the economy is larger in 30 years, this year’s decline is just a passing point.

Those who sell during a crash either lack long-term aims or let short-term emotions override them. Successful investors could fold up the sails and wait for the storm to pass.

The human brain is wired to feel losses about twice as strongly as gains. A loss of 1 million yen feels psychologically larger than a gain of 1 million yen. To resist this instinct and choose not to sell, successful people always clarified the purpose of their investment: “why am I investing?”

Third: jumping onto trendy stocks

Stocks that are talked about on social media, companies spotlighted in the news, information from friends that “will definitely rise.” Successful investors did not impulsively jump into these trendy stocks.

The reason is simple. When you learn of such information, many others have learned it as well. And information that many people know is already priced into the stock.

There is a saying in the investing world: “buy the rumor, sell the fact.” When rumors spread, the price rises; by the time the actual news comes out, the stock often falls as the story is fully priced in. When you feel a stock will go up after seeing it in social media or financial news, that information is likely already too late.

Successful people invest only in things they can understand. They don’t buy a stock if they cannot explain its business model in five minutes. This rule protected their assets from impulsive purchases.

Fourth: concentrating too much on a single stock or asset

Concentrating all your assets in one stock with the belief “this will definitely rise,” or over-relying on a single asset like only stocks, only real estate, or only cryptocurrency. Successful asset builders did not do this.

Among all global companies, identifying those that will certainly exist in ten years and that will have a higher stock price is very difficult, even for professionals. There are many examples of once-dominant companies that fell into decline after ten years. We have repeatedly witnessed Japanese firms that were once highly successful fall into management crises.

Diversified investing is not a passive strategy of “something will go up somewhere.” It is an active strategy to prevent the whole from collapsing if one part falls dramatically.

Index funds that diversify across global equities mean investing in thousands of companies simultaneously. If one goes bankrupt, as long as thousands of others continue to grow, the overall impact on assets is limited. Diversification does not dilute profits; it reduces risk. By reducing risk, you can stay in the market long term.

Fifth: continuing to choose high-fee products

This is a cost issue that many people underestimate.

Investment trusts charge a management fee called the trust fee. This fee is deducted each year as a percentage of the assets held. For example, a fund with a 1% annual trust fee versus a 0.1% fund has a 0.9% difference.

That 0.9% difference seems small, but it makes a surprisingly large difference over the long term.

If you manage 10 million yen for 20 years with a 6% annual return, compare a net return of 5% after a 1% fee to a net return of 5.9% after a 0.1% fee. The former grows to about 26.53 million yen, the latter to about 31.22 million yen. The difference in fees alone is about 4.7 million yen.

Successful people did not overlook this fee gap. When choosing similar investments, they pick the cheaper option. This may seem obvious, but many people fail to practice it. Products recommended at banks or securities outlets often have higher fees because financial institutions profit from fees.

Successful people did not blindly accept the financial institution’s “recommendations”; they made a habit of checking and comparing fees themselves.

Sixth: investing life savings meant for living expenses

There’s a saying: “invest with surplus funds.” This is one of the absolute principles of investing, yet surprisingly many people fail to follow it.

Living expense reserves are cash set aside to cover sudden illness, job loss, or unexpected large expenditures. Generally, it is recommended to keep 3 to 6 months’ worth of living costs in cash on hand. If monthly living costs are 200,000 yen, that’s 600,000 to 1.2 million yen.

If you invest this emergency fund, you may have to redeem investments during a crisis to cash out. The problem is that such emergencies often occur during poor market conditions. Illness, job loss, major repairs—these events are stressful, and having your assets decline while you redeem them is an extremely painful experience and can lead to the mistaken conclusion, “I shouldn’t invest.”

Successful investors secured their living defense funds before starting to invest. This cash is not invested. No matter how attractive an investment opportunity appears, they do not touch this fund. This rule enabled calm decision-making during emergencies and allowed long-term investing to continue.

Seventh: excessive use of leverage

FX leverage of 10x, or stock margin trading at 2x to 3x. These can offer large profits with small capital, but they also carry the risk of large losses from small movements.

Many successful investors did not use leverage. If they did, it was only in a very limited scope.

The reason is mathematical.

If you incur a 50% loss on leveraged investment, you need a 100% gain to break even. If 1 million yen becomes 0.5 million yen, you must return to 1 million yen to recover, which requires 100% return. A 50% loss cannot be recovered by a 50% gain alone.

Moreover, leveraged investing has forced liquidation. If the market moves beyond a certain threshold, your margin becomes insufficient and automatic forced closure occurs. This robs the investor of the option to wait for the market to recover.

The principle of “holding on during a crash” does not apply to leveraged investments. Forced liquidations can eject you from the market at the worst possible moment.

The essence of asset formation is not to magnify gains but not to lose a lot. Leverage increases both the speed of gains and the speed of losses. Successful investors understood this asymmetry of risk.

Eighth: ignoring tax structures

Taxes take about 20% of investment profits. Even if you earn 1 million yen, you keep only about 800,000 yen.

Ignoring taxes as if they’re unavoidable costs creates a large long-term gap compared to learning and legally minimizing them.

Two systems from the government—NISA and iDeCo—address this tax issue. With NISA, investment profits are tax-free. With iDeCo, contributions are deductible from income, and profits inside are tax-free. There is no reason not to use these.

Successful investors understood these systems and maximized their use. They fully utilized their annual NISA allowance and contributed up to the iDeCo limit. These two alone can save several millions of yen over decades of investing.

They also used tax-loss harvesting through annual tax filing. When one investment incurs losses and another yields profits, you can offset the taxes on the gains. This is another mechanism that many people are unaware of and do not use.

Increasing wealth and preventing tax erosion are two wheels of asset formation. The same principle of reducing costs while increasing returns in business applies to personal asset formation.

Ninth: blindly copying someone else’s success story

Seeing someone on social media or YouTube say, “This investment turned me into 10 million yen,” and trying to replicate it. Successful people did not do this.

Other people’s successes often lack reproducibility.

When you hear about someone’s huge gains in FX, sometimes the reason is that the market environment at that time was unique. Even if someone earned large profits by investing in a particular cryptocurrency in 2020–2021, that was due to a special market condition of that period. Doing the same thing now does not guarantee the same result.

There is also survivorship bias. People who made 10 million yen in FX speak loudly, but those who lost 5 million yen do not. Successful experiences are visible, while failures are hidden. If you only consider visible successes, you will overestimate your chances of success.

Successful investors distinguish between “getting ideas from others’ success experiences” and “immediately copying them.” They use others’ experiences as references, then think for themselves to decide what fits their own situation, risk tolerance, and time horizon.

Tenth: giving up halfway

Last and most importantly.

The biggest difference between those who succeed and those who fail is ultimately whether they kept going. Knowing the right method means nothing if you quit halfway.

Reasons people give up on asset formation include fear after a crash, cutting contributions when finances get tight, getting bored because results take too long, or wandering in search of a better method.

Asset formation is a decade-long process. In the first three years, dramatic changes are hard to feel. Even with 1 million yen invested at 5%, you gain 50,000 yen in a year. It’s easy to feel that “this is all I’ll get.” But after ten years you’ll have 1,620,000 yen, after twenty years 2,650,000 yen, and after thirty years 4,320,000 yen. The first three years and the last three years are completely different experiences.

Successful investors understood this compounding structure—that initial progress is slow, but accelerates later—so they could continue with quiet daily efforts without getting bored. They did not switch to an even better method halfway. Once a system is built, you should not touch it. The power of not touching is the strongest weapon for long-term investing.

To you who are reading this

After reading ten “things not to do,” you may have found yourself recognizing several of them.

What matters is changing from today. If you used to try to predict the market yesterday, stop today. If you feel like selling during a crash, reread this article. If you hold high-fee products, review them within this month.

Most failures in asset formation come from patterns of action rather than a lack of knowledge. You continue doing the right things while also continuing to do wrong things. Reducing those wrong things one by one leads to faster asset growth.

Deciding what not to do often has a greater effect on long-term investing than adding more. Don’t do unnecessary things. Don’t touch. Wait. This is the essence of asset formation.

Rather than flashy investment stories, the quiet practice of not doing certain things creates differences in wealth ten or twenty years later.