If you were not aware of this, now you are. You have just added a fundamental pillar to your knowledge base. Let’s take a moment here. It is essential to appreciate that we need the institutions to provide the liquidity that causes the big moves in the market — these moves last weeks, months, even years.

However, we do not want to approach the financial markets as they do. Instead, we want to identify where they are, one of the enormous benefits of technical analysis, using charts and higher timeframes, as you can see exactly where they are.

The institutions do the work; we just piggyback the ride, extracting profit using the relevant strategies for us as everyday people. This is how you invest smart, get your money to do the hard work for you, do less, and make far more over the long term.

Pillar 2

Once you know the differences between us, the private investors, and them, the institutions, we then need to adopt the right mindset to achieve our goals.

Financial literacy means having the right knowledge to:

• Stay true to your long-term goals without deviation.
• Filter out the nonsense and the noise littered all over the internet.
• Not fear the financial markets as rigged, a scam, a poisoned chalice, or any other story you tell yourself.
• Embrace it for what it is, the most powerful vehicle for us as everyday people to generate wealth.
• Do what most cannot, which is to move with stealth and accuracy in building a portfolio of epic proportions.

The internet has levelled the playing field to allow anyone and everyone to step into the trading/investing space with very few barriers to entry.

Brokers, charting packages, news terminals, financial websites, the choice is endless and are all readily available from the free to the expensive.

Here is the challenge: what is useful and what isn’t? What will help grow your portfolio, and what will deplete it? Financial literacy means having these answers.

Pillar 3

I have said this before, investing is simple but not easy. The best techniques to consistently extract profit from the financial markets are simple to learn. In comparison, allowing your portfolio the time and space to grow is not easy and why so many then opt for the doomed get-rich-quick options.

However, stay true to the process, and you will be rewarded with the mind-boggling returns of compound growth. We will look at compounding and precisely what you can achieve in detail in a future article.

Pillars 1 and 2 will lay the foundation for Pillar 3, turning theory into practice to make money. There are only two steps to putting a portfolio together that performs consistently well between now and retirement.

Step 1 – The ability to choose the best high-probability assets for the portfolio.
Step 2 – The ability to extract as much profit as possible as safely as possible.

Nail this, and you will be unshakeable.

So how exactly do you this? Well, first, you need to do a little planning and preparation. Strong roots mean strong results.

Main Take-Away:

• Lesson 1 – Save at least £10k to £20k to give yourself a solid foundation to build from. This may require sacrifices at first but as you earn more and save more, the balance of the ‘having a life/saving money’ dynamic tilts in your favour.
• Lesson 2 – Looking at charts as a trader does but holding positions for extended periods as an investor does is a complete approach for us as everyday people.
• Lesson 3 – Protect yourself from misguided and ill-informed opinions by becoming financial literate.
• Lesson 4 – Financial literacy means knowing precisely what you need to know to make as much money as possible as safely as possible between now and retirement. The rest is noise.