10 things that people who have successfully formed assets will absolutely not do – copy

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

Save regularly. Diversify. Hold for the long term. Choose index funds. All of these are correct. But there is a reality that many people don’t see their assets grow even though they know what to do.

Why is that?

One reason is that they do not know what they should not do.

Even if you are doing the right things, if you are also doing the wrong things at the same time, your efforts cancel each other out. If you are saving 30,000 yen a month while simultaneously burning through the same amount in leveraged FX trades, you seem to be making progress but you are actually back to square one.

Today’s article is not about “what you should do.” It’s about what successful wealth builders say they never do.

First: attempting to predict the market

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

“Is now the time to buy?” “Will there be a crash soon?” “When is the top for this stock?” They stop spending time and energy on such predictions.

That’s because no human can accurately predict short-term market moves. This isn’t a harsh judgment; it is a fact. Among actively managed funds worldwide, the portion that consistently beats the market over the long term is below 20%. Even professionals often cannot read market movements.

Yet many individual investors feel they can “read the market” and repeatedly buy and sell based on forecasts. When a prediction hits by chance, they mistake it for talent. But over the long term, the accuracy of such forecasts is mostly no better than luck.

What successful investors practiced was to stop forecasting and “let the system work.” Invest a fixed amount on a fixed date every month. Do not change regardless of market conditions. This eliminates the question of whether it’s a good time to buy. Those who let go of predictions free themselves from emotions.

Second: selling during a crash

The biggest dividing line between failures and successes in wealth formation lies in behavior during crashes.

When a crash comes, many people become scared and sell. During the COVID-19 crash, when the Nikkei Average fell by more than 30%, many individual investors panicked and sold their holdings, watching the subsequent rapid recovery with envy.

Those who succeeded did not sell. On the contrary, some perceived the price as “lowered” and actually increased their monthly contributions.

This is not about courage. It’s about understanding.

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

People who sell during a crash either lack a long-term objective or are overwhelmed by short-term emotions. Those who succeed kept their long-term goals in mind and could wait out the storm with sails furled until it passed.

The human brain is designed to feel losses about twice as strongly as gains. A 1,000,000 yen gain feels less than a 1,000,000 yen loss; the psychological damage is greater. To resist this instinct and choose not to sell, successful people always clarified why they were investing in the first place.

Third: chasing fashionable stocks

Stocks that are talked about on social media, company features in the news, or “this will surely go up” tips from friends. Wealth builders do not impulsively jump on these hot stocks.

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

There is a stock market adage: “Buy the rumor, sell the news.” Prices rise during the rumor, but when the actual announcement comes, the stock often falls as the favorable news has been priced in. When you see a stock trending on social media or financial news, it is often already too late to buy.

Successful people invest only in things they understand. If you cannot explain in five minutes why you think a company will rise, you should not buy. This principle has protected assets from impulse-driven losses.

Fourth: concentrating too much in a single stock or asset

Putting all your assets into one stock because you are certain it will rise, or concentrating entirely in one asset class such as stocks, real estate, or crypto, is something successful people avoid.

Among the world’s companies, identifying which will exist in ten years and have a higher stock price is extremely difficult even for pros. There are many historical examples of once-dominant companies collapsing ten years later. We have repeatedly witnessed Japanese firms that were once leaders fall into management crises.

Diversified investing is not a passive strategy that says “some part will go up.” It is an active strategy to protect assets by ensuring that even if some parts fall, the whole does not collapse.

Index funds that invest across global equities imply investing in thousands of companies simultaneously. If one goes bankrupt, the impact on overall assets is limited as long as the remaining thousands continue to grow. Diversification does not dilute profits; it dilutes risk. And by diluting risk, you can stay in the market for the long term.

Fifth: choosing expensive underperforming products

This is a cost issue that many people overlook.

Mutual funds charge a management fee, called the trust fee. This fee is deducted annually as a percentage of assets. For example, a fund with a 1% annual fee versus a 0.1% annual fee has a 0.9% difference.

That 0.9% difference may seem small, but it makes a huge difference over the long term.

If you invested 10 million yen for 20 years with a 6% annual return, compare an actual net return of 5% after a 1% fee with an actual net return of 5.9% after a 0.1% fee. The former would yield about 26.53 million yen, the latter about 31.22 million yen. The difference due solely to fees is about 4.7 million yen.

Successful people do not ignore this fee gap. If you are choosing between similar investments, pick the cheaper one. This may seem obvious, but many people do not practice it. The products offered at bank or securities counters are often higher-fee. This is because financial institutions profit from fees.

Successful people did not blindly follow the institutions’ “recommendations”; they developed a habit of checking and comparing fees themselves.

Sixth: investing your lifestyle reserve fund

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

A lifestyle reserve fund is cash set aside to prepare for sudden illness, unemployment, or unexpected expenses. Generally, it is recommended to keep three to six months’ worth of living expenses in cash at hand. For example, if monthly living expenses are 200,000 yen, that is 600,000 to 1,200,000 yen.

If you invest even this reserve, when an emergency occurs you would need to liquidate investments to cash. The problem is that this timing often coincides with a weak market. Illness, job loss, major repairs—these emergencies come with high stress. Having to unwind investments in such moments is emotionally painful and can lead to the mistaken conclusion, “I should never invest.”

Successful wealth builders secured their lifestyle fund before starting to invest. They did not invest this cash. No matter how attractive an investment opportunity looks, they did not touch this fund. This rule kept them calm in emergencies and enabled long-term investing.

Seventh: taking excessive leverage

Ten-to-one leverage in FX, two- to three-times leverage in margin trading for stocks. These can yield large gains with little capital but carry the risk of large losses with small moves.

Many successful wealth builders did not use leverage. If they did, they kept it within very limited bounds.

The reason is mathematical.

If you lose 50% on a leveraged investment, you need 100% gain to break even. If 1,000,000 yen becomes 500,000 yen, you must gain 1,000,000 yen to return to 1,000,000 yen. A 50% loss cannot be recovered by a 50% gain alone.

Additionally, leveraged investments have forced liquidation. If the market moves beyond a certain point, your margin is insufficient and positions are automatically closed. This robs you of the option to “wait for the market to recover.”

The principle of holding during a crash does not apply to leveraged investing. Forced liquidations can eject you from the market at the worst possible moments.

The essence of wealth formation is not “how much you can greatly increase” but “how much you can avoid significant losses.” Leverage increases both the rate of gain and the rate of loss. Successful people understood this asymmetric risk.

Eighth: ignoring the tax system

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

Ignoring taxes as if they are inevitable creates a big long-term gap with those who learn legitimate ways to minimize taxes.

Two government schemes, NISA and iDeCo, address this tax issue. In NISA, investment profits are tax-free. In iDeCo, contributions are deductible from income, and profits during the investment are tax-free. There is no reason not to use them.

Successful wealth builders understood these schemes and used them to the fullest. They fully utilize annual NISA allowances and contribute up to the iDeCo limit. Just these two can save hundreds of thousands or millions of yen over decades.

They also used tax-loss harvesting through filing tax returns. When one investment loses money while another gains, you can offset taxable gains. This is another mechanism many people are unaware of.

Growing money and not letting it be eroded by taxes are two sides of asset formation. The same principle that underpins cost control in business applies to personal wealth formation.

Ninth: copying someone else’s success story verbatim

Seeing someone say on social media or YouTube, “I turned 10 million yen into this much through this investment,” and trying to replicate it. Wealth builders do not do this.

People’s success stories often lack reproducibility.

When you hear about someone making huge profits from FX, their success may be because the market environment at that time was special. Even if someone invested in a specific crypto from 2020 to 2021 and made large profits, that was due to the era’s unique market conditions. It does not guarantee the same results now.

There is also survivorship bias. People who made 10 million in FX may tell their story loudly, but those who made 5 million and lost it do not. Visible success stories lead us to overestimate the likelihood of success.

Successful people distinguish between drawing ideas from others’ experiences and simply copying them. They consider their own situation, risk tolerance, and time horizon, and through their own assessment choose methods that fit them.

Tenth: giving up midway

Lastly 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 along the way.

Reasons people give up include fear after a crash, cutting back contributions due to financial stress, losing interest because results take long, or wandering in pursuit of better methods.

Wealth formation is measured in decades. The first three years are rarely dramatic. Even if you invest 1,000,000 yen at 5%, you gain 50,000 yen in a year. You might feel, “Is this all I’m going to get?” In ten years you will have 1,620,000 yen; in twenty years, 2,650,000 yen; in thirty years, 4,320,000 yen. The first three years and the last three years offer completely different experiences.

Successful people understood this compound-interest structure of “it’s modest at first, but accelerates later,” which allowed them to persist with quiet, incremental effort. They did not switch to seemingly better methods midway. Build the system once and then leave it alone. That power of not touching it is the strongest weapon in long-term investing.

This message for you, the reader

Some of you who read the ten “things not to do” might recognize a few.

What matters is changing starting 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 held high-fee products, review them this month.

Most wealth-formation failures come less from a lack of knowledge and more from patterns of behavior. You continue to do the right things while simultaneously continuing to do wrong things. Reducing each of those wrong things will accelerate wealth formation.

Rather than adding more tasks, deciding what not to do often yields greater long-term investment results. Do not do unnecessary things. Do not touch. Wait. This is the essence of wealth formation.