The path to becoming a successful investor is not an easy one. It takes knowing the ins and outs of the financial markets you are dealing with, time and patience, your personality as an investor and good old fashioned trial and error. In series #5 of “Successful Investment Series” we will cover some of the basic steps that you need to take in order to become a successful investor and some of the issues to look out for along the way.
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1.) Getting Started
- Similar to going on a long camping trip, you do not just rush out into the woods with no gear or plan of where you are going.
- Successful investing works in the same way.
- You must ask yourself, where are you going? What do you need to get there?
- In my investment series #1 “The Importance of Goal Setting” I lay out how setting goals can help you define your destination which allows you to plan your investment journey accordingly.
- Once you have asked yourself these questions and defined where you are going, you must take the most important step and just get started!
2.) Knowing the Market
- Educate yourself on the market you are investing in and the others that influence it.
- There are many good resources out there to help you understand theories such as portfolio optimization, diversification and market efficiency.
- Get out there and find some good resources and engage your brain.
- Some of my favorites: “The Intelligent Investor” by Benjamin Graham, “The Four Pillars of Investing” and “If You Can” by William J Bernstein, “Beating the Street” by Peter Lynch.
- The best piece of advice I can give you is, "Invest in what you know."
3.) Know Yourself
- I can not stress enough the importance of knowing yourself and how you tick.
- No one knows you and your situation better than you do and you must be the most qualified person to do you own investing.
- By knowing yourself and how you react to certain situations will help to guide you in your investment journey.
- Here are some helpful tools that I have used to identify my own personality traits.
- http://www.investopedia.com/terms/b/bailard-biehl-and-kaiser-five-way-model.asp
- https://www.gallupstrengthscenter.com/
4.) Find the Path that Fits You
- The resources, personality and knowledge you have will determine the path you take to investment success.
- I personally implement the, “Pareto Principle” having around 20% of my portfolio earning around 80% of my profits, while having the other 80% earning the remaining 20%.
- I use this principle as it helps me to keep my risk lower and allows me to view my overall portfolio and make adjustments according to my plan.
- Over time you must find what works best for you.
- Some investors like myself play a very active role in their portfolio, while it works better for others to be less active as constantly checking charts can cause anxiety for some. This is why knowing who you are and setting goals is so important.
- The best advice I can give you is to stay disciplined and do not veer from your goals that you set forth from the beginning.
Key Points
- Getting started is the hardest part. Develop a plan and put it in motion.
- Knowledge of the markets are vital to becoming successful. Expertise will come with time.
- The more you know who you are and how you act the better you can use those traits to propel your investments further.
- We are all different and only we can determine our specific investment path based on a number of factors.
- Do what works for you!
The previous 4 parts of the series
#4.) https://steemit.com/investing/@elderfinancial/successful-investment-series-4-inventing-is-not-sexy
#3.) https://steemit.com/investing/@elderfinancial/successful-investment-series-3-check-your-emotions-at-the-front-door
#2.) https://steemit.com/money/@elderfinancial/successful-investment-series-2-forming-financial-habits
#1.) https://steemit.com/investing/@elderfinancial/successful-investment-series-1-importance-of-goal-setting
Please leave a comment below if this helped you, or if you have something to add that was not included
Also, I am looking for some literature on the crypto space if anyone has any good recommendations?
Thank you all so very much for supporting me with your upvotes, resteems and comments. I look forward to hearing from you all!
Cheers,
Nick