Steps to Becoming an Investor

becoming-an-investor

Investing may sound scary if you’re new to the investment arena, but it can be summed up fairly simply.  When you invest, you get your money to work for you.  Everyone would love to make more money, but there are only so many hours in the day. Investing gives you the chance to have your money work for you without YOU having to put more hours on the clock that you just may not have.

Since it’s impossible to duplicate yourself so you can work more hours, you an instead, send your money out to work FOR you.  It will work around the clock for you as well, while you’re sleeping, socializing, and working as well.  You have a bigger chance of increasing your income through investing and will not have the extra drain on family time or your health.

Where is Investing Currently?

Investing and the stock market currently are kind of in a middle ground state currently.  There hasn’t been a lot of momentum going on lately even though over all the long term trend is still going well.  This may sound bad, but it actually gives investors a chance to look over their portfolios and get things cleaned up.

That could involve getting rid of the losing investments that aren’t making you money the way you want and also involves only buying when the set ups and stories are in your favor. It is also a good idea to have cash around as well and not tie all your cash up in investments.

What Great Investors Have in Common

great-investorsIf you did a study of investors that people considered great, you would inevitably notice some common traits and characteristics that they share. Those characteristics contribute to them being a good investor.

We’ve listed some of these common traits among good investors. You don’t have to be rich or famous to become a great investor.  How many of these traits do you have? It’s never too late to get started adding them to your life.

  • Always Keep Learning – One of the most notable characteristics of a great investor is knowing that they don’t “know it all”. They spend a lot of their time studying, much more so than most run of the mill investors. Reading is something they do often and their bookshelves are filled with books about their craft (investing) as well as business, mindset, etc.  They also have magazines, newspapers, and know where all the good investing sites are.  Adding to their knowledge base on a regular, even daily basis is a regular activity.
  • Maintain Strong Emotional Control – It’s very easy to get emotional over good and bad investments. Great investors keep a good hold on their emotions. They are not drawn into discussions with financial advisors affect what they do and are not driven to decisions by greed or fear.  Their reactions to winning are as neutral as their reactions to losing are…stable and middle of the road.  Overconfidence is not something you will see, nor will you see insecurity and flightiness.  They understand that when it comes to investing they have a 50/50 chance of winning or losing.
  • Persistence is Key – A great investor is not going to jump from one strategy to another always trying to find that one hot tip. They will formulate their strategies based on their knowledge and what they have and then they will stick to it. That is not easy to do, and the level of persistence it takes to stick to your strategy whether you are winning or losing is one of the earmarks of a great investor. Why stick to your strategy? Because it is not a strategy based on a whim.  Quitting or switching back and forth will not give you better odds it’ll actually just make things worse.
  • Always Learn from Your Mistakes… Quickly – All investors go through trials, they make mistakes, the learn lessons and have triumphs as well. What sets the great investors apart from the so-so investors is that they learn from their mistakes and they learn quickly. Making the same mistake over and over again only shows that you are not getting the lesson the mistake has for you. Until you learn that lesson, you will continue to make that mistake.

These characteristics above are only a small handful of the traits that make up a great investor. One of the best things you can do when you are starting out, is to find one or two investors that are considered leaders in the field, and watch them. Study their behaviors, their actions, their attitudes…it’s not about following their exact investment strategy. It’s about reading between the lines and seeing what makes them who they are.

Steps to Becoming a Successful Investor

successful-investingWhether you are just getting starting with investing or you have been doing it for a little while, there are steps you can take to become a successful one. It takes time, it takes applying the characteristics and traits we listed above, but it CAN be done if you just apply yourself and commit to it.

  • Don’t expect to be a millionaire overnight – This isn’t negative thinking in action; it just means that you understand that becoming a successful investor isn’t about instant success. Positive thinking and visualization are mainstays of a successful investor and play a large part in your success, but being risky with your investments when you don’t have the knowledge yet is not positive it is foolish.
  • Have clearly defined goals – Always know why you want to be a successful investor. You don’t have to justify your reasons, but investors that have reasons are a lot more focused, motivated and successful than those that got into it because it sounded cool.  Having a “Why” will keep you going when it feels like you will never learn everything (you won’t ever know it ALL, so get rid of that goal!) Hold that “why” close, define the goals you’d like to achieve and let it drive you toward great success.
  • Don’t drag out your losses – Successful investors know that it’s best to cut your losses short. A loss is not a reason to STOP investing; even the greatest investors have losses. It’s part of the nature of the business. Inexperienced investors will do everything they can not to take a loss, not realizing they are only increasing the loss. Accept it, have a good stop-loss in place and stick with it!!
  • Treat investing as a business because it is – The most successful investors have a carefully written out business plan that lines up their investing. They also follow a specific approach to the steps they take from selection to exit. Include in your plan your objectives, the psychology behind them, your trading strategies and any contingency plans or exit strategies you want to employ. The business plan should be enjoyable to set up and even more so to implement.
  • Have your head in the game – Create a routine that leads up to your investment work and stick to it. Having your head in the game is very important in any career and investing is no exception.  Get up early, (studies show the most successful investors are early risers) get your mind awake with breakfast or exercise, study the day’s market first thing go over the previous day’s investment activities and then get started.  You can become a successful investor when you are munching on breakfast, checking the social media platforms and watching TV.

Resources