The Many Emotional Stages of Wealth Building


Lately, I’ve been hanging out with a lot of successful investors. Multi-millionaires, if you will, who could EASILY retire tomorrow and live out the rest of their lives in extreme comfort and relaxation. However, time and time again, I find that these people are now even more consumed with building wealth than ever before. It’s as though their goals and aspirations only get more lofty as their victories pile up.

It’s been often stated, but worth repeating: “There is no limit to greed.

When I first started the journey to early FI, I wrote an article entitled, “When is Enough… Enough?” No question, I’ve come a long way since then, and looking back, a lot of what I wrote then still resonates with me today.

That is, I’m in this game (still) to win back time. Financial freedom isn’t a means to an end… It’s a rite of passage to the start of a new, better life. The rest of your life.

Phase One: The Start

In the beginning stages of wealth building, almost everyone is excitable, full of energy, and anxious to make their mark. For whatever the reason, most everyone arrives at The Start when they make a declaration to themselves (and/or to the world) that they are serious about getting their finances in order and want to start investing!

Before long, we start to take our first lumps along the way (the deal that was too good to be true, the guru scam course/program, etc.), and quickly realize that the process of building wealth isn’t as straight-forward or as easy as we might have first anticipated. Naturally, many people quit along the way…

It’s understandable why people quit in the early stages… you have nothing to lose! How many of us know of a co-worker who “invested” in the stock market on the next high-flyer stock, watched it struggle for a few months, and then ran to the exits selling for a loss?

These very people who quit are also the ones who initially proclaimed to be: “Extremely motivated, passionate, and will do whatever it takes to succeed.

Does that sound familiar? I’m sure you’ve heard it all before, on numerous occasions, coming from newbie investors. Kind of like how everyone wants to get in shape when New Year’s rolls around… So, you can see how fickle emotions really are and how rapidly they can change as the markets begin to vacillate. I was no different myself when I started in 2012…

Phase Two: The First Real Success

But if you can manage to navigate through the initial hurdles, you’ll most likely experience your first real success as an investor. This can be as simple as receiving your first quarterly dividend, watching your shares appreciate by 20%, or cashing your first rent check as a real estate investor.

It’s a tremendously liberating feeling! That first success provides HUGE validation that you are on the right path and doing the right thing. I will never forget the high that I was on when I received my first quarterly dividend, and the first time I received a cashier’s check for rent

After that, you can take whatever “motivation”, or “passion” you thought you had, and multiply that by a factor of 100. That first tangible success is no joke, and even more therapeutic than a Runner’s high; it will help you release even more endorphins and feel-good hormones. 🙂

Phase Three: Brick-By-Brick

And so it continues… Once you’ve planted that first seed, or brick, you’ve put down the foundation for great things to follow. You have the blueprint of what to do, and simply need to continue executing your game plan. When it’s still early on in the game, I doubt that you will lose sight of your core values and motives. That is, whatever first drove you to start investing for financial freedom will still be the main driving force pushing you forward.

For myself, you could say that I’m still in this Brick-By-Brick phase of wealth building. I’ve been in this phase for the entirety of 2013 and 2014. I will probably remain here for a good portion of 2015 as well.

Things from this point-of-view aren’t quite as glamorous as they once were in the previous stage. Yes, success still feel great, but it’ll be tough to replicate, or out-do that initial accomplishment.

The Brick-By-Brick investing phase can be best summarized as: nose-to-the-grindstone hard work, which is the equivalent of working the grind in the rat race. There will be good days and not-so-good days. And if you’re also racing rats all day, it’ll feel like you now own two jobs!

But something else interesting starts to happen during this phase… especially true if you experience success a little too easily. Instead of being consumed by “motivation”, “passion”, and “excitement” for what you’re doing, your emotions start to shift towards something so much more seductive and insidious, “greed”.

Phase Four: Separation Anxiety

Although I still feel like I’m working extremely hard, hustling away everyday with hopes of creating a better future, I gotta confess and admit that I do get bored of stacking bricks all the time.

I want faster, and more massive results. I want to execute a BIG DEAL! I want to crush a home run out of the ballpark…

Why? Because I don’t feel like I’m moving fast enough. Because I feel like I’m not taking quantum leaps and accelerating my wealth building at an exponential rate. Because I feel like I need a substantially larger buffer, or nest egg to allow me to separate myself from the 9-5 job I hate so much…

And I gotta say, this shift in emotion has got me kind of nervous and scared. Nervous and scared, because I ought to know better! The sage advice of “be fearful when others are greedy” needs to apply so that I can shake myself from this temptation.

Now that we are in a rising market, everyone looks like a genius. If anything, fundamentals need to apply more than ever before because greed is becoming so widespread in the marketplace.

I look at this shift in emotion as something that comes naturally to human beings. It’s like a dopamine, or adrenaline rush. Over time, you THINK you need bigger and bigger challenges to experience the same highs. The first time you profited $100,000 on a single deal, you probably felt like it was the best thing that ever happened to you. By the second, or third time around, you might become that aforementioned multi-millionaire investor who now scoffs at such a “low margin” deal.

This type of mindset can lead to very destructive results in the future… But it’s something that can sneak up and engulf you without you even knowing what hit you.

I don’t think I’m fully addicted, yet… but if I keep going down this path, I soon will be!


So, now’s the time for me to take a step back, breathe, and try and put things back into perspective. What is it exactly that I’m trying to accomplish? Why do I feel the need to deviate from the original game plan so much? Why keep gambling on speculative deals that may not come to fruition?

The most obvious answer would again be… greed. But I think it’s more than just greed… or at least a different form of it. Through my own experience, I’m beginning to think that the greed I’m experiencing is a byproduct of fear…

As previously mentioned, when you first start off investing, you’re probably not starting off with a lot of capital. So, hit or miss, you won’t lose much in the grand scheme of things…

However, once you’ve been on the journey for some time, and have accumulated a sizable net worth, your perspective can change quickly because you will feel like you have so much more to lose…. You’ll want to do whatever it takes to avoid failing… And your instincts might direct you to do something different, even though you aren’t doing anything wrong! If anything, intuition should tell you that you ought to be more defensive with your investment decisions moving forward, but for whatever reason (youth might have something to do with it as well), emotionally, you might feel the need to take even bigger risks to protect the assets that you already own.

It all sound really crazy… but when I step back and analyze, I can see a lot of these things happening to me.

Let’s Try… Logic?

No matter how stoic you are as an investor, we all have our doubts and fears. Investing is never guaranteed, and market crashes do wipe people out.

With that said, there are also those who have become filthy rich by placing the right bets at the right time. And there is a lot of sex appeal in that. Who doesn’t want to discover the next Apple (AAPL) stock before it takes off? Or, who doesn’t want to purchase a huge plot of land in a city destined to boom and become the next Palo Alto?

And I’ve taken my fair share of risks this year. My investment partners and I won a side hustle appreciation deal and then another one. I have over $20,000 invested in Alibaba (BABA) stock at the moment…

How are all these moves even rationalized? Well, it goes something like this: “If these moves pan out, I will come out so far ahead ( from an appreciation point-of-view), that I will be able to easily liquidate these investments and transfer the proceeds into more defensive (stable) holdings.

In theory, by being more aggressive now, I will get to become more defensive later, and better help protect the overall portfolio.

Still sound a little too crazy?

Not Your Conventional Greed

When people think about greed, they tend to look at it only from a conventional, offensive point-of-view:

Greed = More Money = More Toys!

But there are different types of greed. The investor type (derived from fear), is somewhat different. These investors are hungry for the next deal, but they aren’t doing it so that they can spend more bling; don’t worry, the overnight celebrities and lottery winners will more than overcompensate by pissing away more than their fair share of money and by maxing out credit cards on consumer spending to no end.

For myself, I know that the greed I’m experiencing is different from that, because my thoughts on money haven’t changed at all since I first started the journey to early FI. As was written in that earlier post in 2012, I value the simple things in life and don’t need all that much to be happy.

I’m “greedy” because I’m afraid of failure, and want (desire) a larger safety net for early FI… nothing more… so far. I still have absolutely no desire to splurge on a Ferrari or Lamborghini!

Phase Five: There’s More…

But that’s not all there is to it! If we keep on going, another stage will emerge and surface! I can’t speak for myself because I’m nowhere close to being at this stage, but the millionaires that I dine with know the feelings elicited from this stage all too well.

Once you’ve “made it” and separated yourself from the pack, it doesn’t just end there. You would think that these millionaires would all be living on a tropical island somewhere, sipping on pina coladas all day long, but they don’t!

Ego and pride. When you’ve “made it” in the eyes of others, for many, the journey is only just beginning. Why stop now? Why cut short something you are obviously very good and skilled at? Why not… keep going and cement a legacy?

Here we experience greed yet again. Only now, it’s no longer about fear or survival, like Phase 4, but greed has morphed into something else.

It’s so interesting to note — Every millionaire that I’ve talked investing with doesn’t want to stop investing. They aren’t satisfied being in the top 1-2%… They aren’t satisfied with over $10,000/month in passive income…

They want to leave behind a legacy and create generational wealth for their families. They want to earn more so that they can donate more money to charity. They want to put a bigger dent in the universe.

But it’s not all bad and evil… as the media might have you believe.

In fact, a lot of these folks are so unassuming, you would never even guess that they were worth as much as they are. They wear clothes from Target. They drive a Toyota Corolla. They even make me split the bill with them when we eat out!

If you started from the school of hard knocks (and that’s usually the common ingredient with these folks)… those memories and lessons learned are long-lasting and not soon forgotten.

Old (wise) habits die hard, indeed…

Making Sense of Things

When it comes to wealth building, there are many stages and emotions involved. I’ve experienced a myriad of emotions since I first started, so I think it’s helpful to sit back and reflect from time to time.

By no means am I implying what I’ve described and observed above will also happen to you! Maybe you’re way too strong-willed and disciplined to allow for such a thing to happen. But it’s interesting to track the metamorphous that the initial emotions of  “passion” and “motivation” and “excitement” can undergo as they transform into “greed” when success happens (repeatedly). As you ascend further and further up the mountain top, there won’t be a referee on top to blow the whistle telling you, “Congratulations mate! You win!”

Perhaps that’s why we keep aiming for more…

Back to Reality

As always, I’ve never claimed to have the right answers, and I can’t say with full certainty that the investment decisions I’m making today are going to work out tomorrow. Without the benefit of hindsight, things never look as crystal clear as they should.

But I do know that I do need to be more calculated and careful. I’m not saying don’t ever take risks or bet on the next big thing, but you have to know your own risk tolerance before taking action. If a certain move will cause you to lose sleep at night, then it isn’t worth it, even if the potential returns are that much greater.

In my own situation, I’m finding out first-hand that I am somewhat of a gambler (too greedy!). Even when I was investing primarily into dividend growth stocks, I had a propensity for taking flyers on potential big payday stocks. Sometimes it worked out, many times it didn’t. Regardless, luckily, I’ve still always managed to focus on the primary objective: income investing.

And that won’t change in the foreseeable future. Thanks to the feedback from readers, I’m realizing that I need to pull back to prevent myself from swimming too far into the deep end. I’m in the process of completing a cash out refi on Rental Property #2 to pull out $100,000. Previously, I was thinking about investing the capital into another Bay Area property…

On second thought, if it ain’t broke, why try to fix it? Let’s keep putting down bricks! As a matter of fact, I think it’s about time I got back into dividend growth stocks!

I think I’ve flirted around with greed enough… It’s time to go back to the tried and true!


What type of emotions have you experienced as an investor? Does your fundamental strategy ever change due to your portfolio’s performance? How do you keep yourself on track? What tips would you give to other investors?

Print Friendly, PDF & Email
Sharing is Caring:
0 0 vote
Article Rating
Notify of
Newest Most Voted
Inline Feedbacks
View all comments
Jason @ Islands of Investing

What a brilliant post FI Fighter! This sort of self-reflection and questioning is what really helps make a great investor, and I’m certain you’re going to continue to achieve great investing success in your life with this attitude! I’ve definitely ridden some of these big emotional waves, and like you, tend to get greedy for hitting my goal sooner! Right when I started experiencing some big successes with my investing was exactly when I made my biggest investing mistake. I became far too over-confident, and thought I could do no wrong. But it’s so important to learn from all these… Read more »

Income Surfer
5 years ago

I don’t worry about you Fighter, and I’ll tell you why. You are self aware enough to notice, and more importantly CARE, about the changes in your attitude and disposition. That alone puts you miles ahead of most people. You’re doing great…’s just fun to watch you succeed!

I hope your Thanksgiving was outstanding

Dave @ The New York Budget

I absolutely love this post. Good for you for always reevaluating your position and keeping your priorities in focus. I am actually starting on a new, risky, potential money-making adventure myself, but I am keeping in mind that a) I can afford to do it and still stay on track with my current plan and b) it fulfills something beyond just gaining wealth. It’s an entrepreneurial endeavor and I imagine that either way, I will learn a whole lot!

Of course, like you, I am still primarily focused on those vanilla, long-term funds.

No Nonsense Landlord
5 years ago

It’s easy to get caught up in the hype. Slow and steady wins the game. The game might last a few more innings, but in the end it is more stable.

Mr. Frugalwoods
5 years ago

What a great introspectional post! Some greed is good, but there’s a happy medium. For many people, the phases you artfully coined are actually more of a cycle. With the final phase before going back to zero being “Macroeconomic Pullback”. I always like to ponder how I’d feel if I took a 25% hit on my cashflow and asset value. Would I still be able to service my debt load? (Yes) Would I lose sleep over it? (No) By walking through a moderate recession scenario I feel better about deploying capital now. If my assets took a deeper cut that… Read more »


Wonderful post! Great introspective. I think we all go through the processes you’ve mentioned. I’ve evaluated and re-evaluated my approach many times over the past few years. I can guarantee that I’m not the same investor I was 10 years ago. I’m much more mature and controlled. I have a different perspective and am more protective of my hard-earned “wealth”.

Thanks for the thought provoking post!

Even Steven
5 years ago

Really like this post FI Fighter, printed it off and read it on the train, so had a good amount of time to think about it internally. Our phases may have got lumped together a little with pay off debt and real estate, but I remember not long ago we were looking for the 3rd rental property with the same “greed”, it didn’t work out but it made me realize we do have “Enough” to hit our goals of early retirement. In our case I almost feel like I’m removing the bricks of debt, so we can get into our… Read more »

5 years ago

Very good post, FIF A lot of this rings true in my case too. I’m just laying bricks but I guess I’m a bit more risk-averse than you are, since I have very little temptation to “swing for the fences”, especially when I’m so close to the finish line. Instead, I’m now just content to trust the process more. I also know when I’m out of my depth, so I’m never really tempted to put money into the stock market. My challenge now is just to hang on through the next year or two, especially if I want to stay… Read more »

5 years ago

Good post. I haven’t followed your blog long but I have gone through some of the older posts and it was interesting to see a previously rational and patient investor change. I was wondering where you were going to deploy the money you got from the refi, but it didn’t seem like it was going to be into anything safe. It’s hard to fight greed, but recognizing it is a great start. I have a different problem, overconfidence. That’s even harder for me to deal with.

5 years ago

It’s funny. I noticed how far I am, psychologically (not monetarily…yet), on the path to wealth when I talk to my brother about his own desires to start a business and generate passive income. He is filled with doubts and only sees roadblocks where I see possibilities and, at worst, unknowns.

5 years ago

Great Post! I’m just recently started the journey to FI and I’m definitely in phase one. I had a big smile reading your description of my mistakes. You even included my recent start with SeaDrill. 😉 It’s really motivating to read your thoughts about the whole process. I’m not even in the brick-by-brick mode, because I’m just too motivated to gain a rising income stream fast – exactly like you described it. But I’m sure, I’ll find the right(less risk oriented) path for me sooner or later. The most important thing for me is to work hard and save as… Read more »


[…] the last post, I did some reflection and concluded that I needed to be more careful with my investments as I try and navigate through the last stages of early […]

5 years ago

Great to hear your thoughts as usual FIF!

And really glad your thoughts on “enough” have not changed since you started out. It’s nice to hear that many still in the game and pushing for more have some altruistic motives as well pure greed, but even then I’m sure they could strike a better balance between living their own lives as well as making even more money.

Ron R.
Ron R.
5 years ago

Great article, very well layed out. I would like to recommend a book I just finished called “Build Wealth and Spend It All” by author Dr. Stanley Riggs ( I want to recommend this book as I finished it truly feeling like I have learned invaluable lessons about the future of my families finances. Most people are so hung up on retirement and how much money they will end up with, they don’t take stock of what to do with it along the way. Dr. Riggs offers very down to earth advice and planning for the everyday person to not… Read more »