Are you dreaming about becoming an investor? Becoming an investor for almost decade now has been both very challenging at times as well as very rewarding. It is like anything though, the more you do it, the easier it becomes. The following article is specifically designed for those people who desire to become full-time investors. In this post, you will discover all necessary tips on how to become an investor successfully. Check them out now!
I. How To Become An Investor – 10 Traits Of A Successful Investor
1. Proactive Learner
This is the first characteristic of successful investors. Investors should be proactive learners. They know that the future is unpredictable; thus, they prepare in advance for it. Those people who are considered as average investors try to guess the future of their investments; they count the chickens before they are hatched. In contrast, successful do the opposite; they prepare for the best whilst still preparing for the worst. The advice is that you should always start at the end before you begin. You need to build for yourself an exit strategy before investing anything. That is the reason why successful investors can make money when the market rises and even make more profits when it goes down. If you want to be a successful investor, then it is necessary for you to plan the exit way before entering any investment.
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Patience is extremely necessary for those people who want to become successful investors. When making calculations on an investment, they make sure that their plan will materialize. A key element of investment success requires choosing a long term investment strategy and then having the discipline to actually implement it.
3. Strong Emotional Control
Every true investor knows that the market is controlled by sentiment. Market goes up and goes down are ultimately caused by emotional aspects, including greed and fear. Average investors often invest based on their own emotions whereas successful investors tend to have stronger control over these emotions. Usually, they do not let financial advisors impact their method or option of investing. Also, successful investors have good reaction to either losing or winning. As usual, they do not stop their investing strategy just due to some failures and are not overly confident when winning. Regardless of the market conditions, successful investors still respect the 50-50 chance of losing or winning.
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4. Have Well-Planned Investing Strategy
In fact, the majority of successful investors tend to develop a well-planned investing strategy which works. Then, they stick to this strategy. There are different trends of portfolio strategies. While some investors follow the portfolio diversification strategy, other people who love Warrant Buffet implement the portfolio focus strategy. Each investor has his / her owning investing style and sticks to the one that fits best for him / her case. Regardless of the strategy chosen, you need to ensure that you know what you are doing.
Normally, successful investors focus on their investment method and vehicle. They do a step at a time: one investment at a time. For example: Warrant Buffets focuses on stocks, Tim Ferris focuses on angel investing while Donald Trump on real estate and Jim Rogers on commodities future.
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6. Making Use Of Trend
The next trait that a successful investor should have is that he / she knows how to make use of trend. Average investors just panic over market fluctuations whereas professional investors are not afraid of fluctuations as they can base on these fluctuations to make money. Moreover, successful investors take advantage of trend like market sentiment, company’s crisis and political instability.
Average investors tend to lack of persistence when pursuing their investment while successful investors stick to their investing strategy whether they are winning or losing. It is not a good idea for an investor to jump from one strategy to another or always looking for the next hot trend. That is the reason why they just remain average for a long time, even forever.
8. Dare To Take Risks
Everyone knows that investing is a risk. However, Warrant Buffet once said: “Risk comes from not knowing what you are doing”. It means that whether on the winning or losing side, you should respect the 50-50 rule of success and failure. The main difference between an average investor and a successful investor is that a professional investor always invests with a strong risk management plan.
It is extremely to be strict with yourself if you want to be a professional investor. When it comes to investing, besides the rules as well as principles of investing, you are also guided by a self-imposed standard. By this way, you will stick to your investing strategies though distractions from self proclaimed investment experts.
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10. Learn From Mistakes
When talking about experience, successful investors just simply talk about the mistakes made, trials coped, lessons learned and achievements gained. A beginner investor will never become a successful one if he / she does not experience any mistakes or miscalculations. Professional investors make mistake yet they are not discouraged by mistakes as they know their pitfalls are the indispensible part of the process of becoming a better investor. In other words, average investors think pitfalls as bad. To become the investor you want to be, perceive mistakes as opportunities to learn something new. No school can teach your precious lessons like the real market.
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II. How To Become An Investor – 5 Tips To Be The Most Successful Investor
1. Determine The Type Of Investor You Want To Become
The first tip on how to become an investor you should know is to determine the kind of investor you would to become? Do you want to be a long-term “buy and hold” investor or trader? A buy-and-hold investor believes that trying to pick the right stocks at the proper time repeated is a loser’s game that leads to lots of trading mistakes and lost chances. Therefore, buy-and-hold investing takes much less of your time.
On the other hand, a trader feels that buy-and-hold investors just simply put endure massive bear markets for average profits. Traders want to minimize their losses while maximizing gains. Also, they tend to spend quite a little of time to do it. If you think you want to trade, it is the time for you to read, learn, and research investing as well as trading techniques to ensure that you know what you are doing.
2. Choose The Investment Vehicle
Either you can be a mutual fund investor or a stock and exchange-traded fund (ETF) investor. The mutual fund investors are interested in making dollar-amount investments. Sometimes, they do it on monthly basis. You might be a mutual fund investor if, for example, your own target is to invest about $300 per month. Mutual fund enterprises often make the investing process simple. Also, there are low-cost stock index mutual funds, which are ideal for those people called “buy-and-hold” investors.
In other words, other investors love to control over their portfolios so that they can make stocks and exchange traded funds more proper. In case that you would like to make some bets on specific industry sectors or companies, then you have to set up a brokerage account. And, if you want to be a buy-and-hold investor who is keen on purchasing index ETFs, which trade like stocks, you also need to create a brokerage account.
3. Choose The Investment Enterprise
If you are going to become a mutual fund investor, you should choose a fund enterprise to co-operate with. Normally, several mutual fund enterprises would cater to investors trying to hit the market while others attracted those people expecting to match the market with index funds.
Group is a leader in low-cost index mutual funds. Nowadays, it is still a good choice for a lot of buy-and-hold mutual fund investors. If you like trading stocks ETFs, you need a brokerage firm. In fact, we have three main categories of brokerages, including deep discounters, discount firms, and premium firms.
4. Write A Business Plan
Before going into any business, you always need to create a business plan. Obviously, being an investor is a business. At least, a business plan should consist of “pro-forma” (forward-looking) financial statements, like income statement, statement of cash flow projecting at least 3 years, balance sheet, and marketing strategy. Besides, there should be technology, licensing, occupancy, registration, legal, and administrative requirements.
When creating a business plan, you will see that whether becoming a full-time money manager is suitable for you. Business plan for investing money managers are different from others in which it is essentially presented service models that basing on the use of cash as inventory. Except banking, no other business actually falls into such as category.
5. Understand How You Work
Are you intending to work alone or with others? It is necessary for you to ask yourself if you could do this alone (through sole proprietorship) or you will need some help from individuals or organizations (through partnership) to implement your potential business plan. Of course, there are advantages and disadvantages to each choice. Some people can fly solo, whilst others need one or two co-pilots. It is dependent on your personality as well as risk profile.
In case that you start your business with your own, you obviously will get the full returns and benefits of your success or suffer from all of consequences of your lose. Additionally, the trading and the critical administrative factors of managing a business also burden on you.
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Becoming an investor is not easy but actually rewarding. Make use of all of these tips on how to become an investor now to start your career as a full-time investor professionally.
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