Some of the most successful investors did not make it on top in just a day. It takes patience and time to learn the ins and outs of the financial world and your personality as an investor, not to mention the trial and error you will be facing along the way.
Today, we will lead you through the seven steps of your journey into the investing world and show you what to look out for along you journey.
Successful investing is a journey, not only a one-time trip, and you will need to prepare yourself as if you are going on a long trip. What is your destination? How long will it take you to get there? What resources will you need?
Start with defining your destination and then start planning your investment journey accordingly.
A good example of this is, if you are planning to retire in 30 years at the age of 60? How much money will you need in order to do this? You should ask these questions to yourself first, then the plan you come up with will be determined by your investment goals.
Study What Works Best
Read books or take a course that deals with modern financial ideas that could help you along the way. Some of the people who came up with the theories such as portfolio optimization, market efficiency, and diversification received their Noble prizes for a good reason.
Investing is a combination of both science (financial fundamentals) and art (qualitative factors). The first solid place to start is the scientific aspect of finance and it should not be ignored.
Once you learn what works in the market, it’s time for you to come up with simple rules that could work for you.
A great example is, Warren Buffet, he is one of the most successful investors in the world. He is well known by his quote, “If I cannot understand it, I will not invest in it.” which summed up his simple investment style that had served him well.
Learn More About Yourself
No one knows you better than you know yourself. As a result, you are the most qualified person to do your own investing. Recognize the personality traits that could support or stop you from investing successfully then manage them accordingly.
The best investment results tend to be realized by an individual, or someone who exhibits analytical behavior and confidence and has a good eye for value.
You should always manage your core assets in a systematic and disciplined way.
Know Your Friends and Enemies
Beware of the people who are pretending to be your friend, like some certain unscrupulous investment professionals whose interests may clash with your own interests.
You should always remember that, as an investor, you are facing with other large financial institutions that have more resources, experience in the world of investing and have a greater and faster access to information.
Always put in mind that you could be your own worst enemy. It depends on your particular circumstances, personality, and strategy. You may not know it but you maybe sabotaging your own success.
Be honest with yourself always. Identify and modify factors that are stopping you from investing successfully or moving you away from your own comfort zone.
Look for the Right Path
The level of your knowledge, resources, and personality should determine the path that you choose. Most investors adopt one of the following strategies:
- Diversify – Don’t put all of your eggs in one basket.
- Put all of your eggs in one basket, but watch your basket carefully.
Combine these two strategies by making strategic risks on a core passive portfolio. Some of the most successful investors started with a low-risk diversified portfolios and gradually learn by doing so.
As successful investors gain greater knowledge along the way, they become more comfortable with taking more active stance in their portfolios.
Have a Discipline
Sticking to the ideal long-term strategy is may not be the most exciting investing choice, but your chances of being a successful investor should increase if you stick to the course without letting your emotions or your fake friends, control your way on to the top.
Always Have the Will to Learn
One thing that is hard to guess in investing is the market, but it is certain in one thing: it will be unpredictable. Learning to be a successful investor is a gradual process and the investment journey is typically a long one. There are times that the market will prove you wrong. Always remember that and you should always learn from your own mistakes.
Being a successful investor is not easy. You have to take some steps to get on top and you will always face some struggles along the way, but in the end, it will all be worth it.
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