When it comes to accumulating extra money, maybe to supplement your existing income or to put towards a major project or pension, investing is one of the best methods. In fact, the rewards, if you are skilled enough, can run into millions of dollars. Of course, it’s also possible to lose money when you invest.
Why is it that some investors are successful, while others struggle to make any profit at all? What do successful investors have that the others don’t? You can learn a lot by studying the habits of those who succeed at investing, perhaps through reading threads in a popular trading forum or through seeking out the biographies of famous investors. However, there are certain well-known basic attributes and skills that can determine success or failure.
Have a plan
Successful investors never enter a market without having a plan. Yes, the ability to react quickly can be useful, but it is far more important to have a plan for your investment activity. You need to know what your goals are, in the long term and the short term, and you should have a detailed roadmap of how you intend to reach those goals, which you review regularly. Stock markets and other venues of investment can be volatile – so all the more reason why you need a plan on which you can rely.
Knowledge is power
There is no such thing as too much knowledge when it comes to investing. The most successful operators in this field have a detailed knowledge of the market in which they will be working. They know everything there is to know about the companies in which they will be investing, and will spend as long as it takes to accumulate this knowledge. Above all, they will never make an investment that is not backed up with solid reasoning that is founded in a deep knowledge of the subject.
Make your own decisions
It is, of course, important to listen to opinions, ideas and the latest news from the markets. Ultimately, though, successful investors make their own decisions. Thanks to their knowledge, their experience and their solid planning, they are in a good position to make clear-headed decisions. When you make your own decisions, even mistakes can be educational, but those who follow trends or bend with the wind rarely improve their investing skills.
Take a long-term view
Psychology plays a part in making a success of investing, and one thing that is common to all successful investors is their ability to take the long view. Things go wrong from time to time, and the market can be unpredictable, but whatever the short-term fluctuations in their fortunes, successful investors stick to their plans, remain patient and focus on their goals. They are never swayed by emotions, only by facts, details and logic.
The reality of investing is very different from the impression given by movies and sensationalist media. Yes, there are moments of elation and disappointments, but the best investors are those who do their research diligently, manage their risk carefully, and stick to their long-term plans. If you can master the qualities and skills outlined above, then you may well be taking the first steps on the road to being an investment master.