The Best 7 Tips to Becoming a Successful Investor
The stock market made people like Warren Buffett and Geraldine Weiss, two of the most successful investors in the world, billions of dollars.
11:12 10 November 2020
Investing is a great way to accumulate wealth and achieve financial security, but where do you begin? Here are some pro tips to becoming a successful investor:
- Learn the Basics
Like any subject, it is best to know the fundamental basics, so you can create a solid foundation on which to build. Try learning the terminology, different types of investment accounts, methods of stock selection, and so on. According to Warren Buffett, "Risk comes from not knowing what you are doing."
Become a perpetual learner, always improving, always seeking more knowledge. It will make investing seem easy and more natural.
- Do Your Research
Research goes hand-to-hand with perpetual learning. Pay attention to the current market, but also dig deeper. There are many ways in which you can research the markets, but it is best to utilize websites that have already done much of the research needed in stock investing.
- Understand Your Risk Tolerance
It is fair to say that everyone has a threshold for risk, yes? Like speeding down the highway or climbing a mountain, there comes a certain point where you think, hey, maybe I should take it down a notch. The same goes for investing—you must understand your risk without causing too much emotional distress. If you bring the emotional aspect into investing, you are bound to problems.
- Set Realistic Expectations
Like any trade, investing takes experience, so if you are expecting to become a millionaire overnight, you might be disappointed. Investing is not gambling—nor is it a race—it is a marathon. You build wealth over an extended amount of time. Pay attention to historical numbers and expert assessments, so you have a better idea of what to expect.
- Set Goals
Why are you investing? To buy a new car or home, or to save for retirement? Discover your motivations and set a realistic timeline.
Do you need to save up for next year? Two years? Ten years? Setting goals and milestones will keep you focused on the task at hand while feeling the refreshing air of accomplishment.
- Be Patient
I am sure you have heard people say investing is like watching grass grow. You must plant the seeds, stay patient, and watch them blossom. Warren Buffett said, "The stock market is designed to transfer money from the active to the patient.”
Patience, patience, patience. Patience is key.
- Buy Low, Sell High
Buy low, sell high—the golden rule of investing. Look for low risk and low-priced stocks with a high return. It may sound obvious, but you would be surprised at how many people buy expensive stock and then sell it for a loss.
“I don't look to jump over seven-foot bars; I look around for one-foot bars that I can step over." – Warren Buffett