by Tony Joshie
"In investing, what is comfortable is rarely profitable." - Robert Arnott
The first and the foremost thing that must be kept in the mind is that you cannot become successful overnight. You may seek knowledge and gather information but you cannot be good at something unless you turn that idea into practicality. Investing your money is a risk and where there is risk, there is will. Even the leading investors of the world have spent their lives working on it. Let's learn how you can a good investor and pay attention to things that may do wonder for you.
As an investor, if you want to see your investment grow then never make a hasty decision. Not all investment opportunities are for you, worrying over on every deal will not make you successful. Don't compare yourself with others and prevent yourself from making any crucial mistakes; it may generate miserable results.
Learn about the factors that lead to hasty decisions in this video.
A clear vision about your goals and objective is critical and professional investors do this even before raising the capital to invest. Big financial institutions have other ways of doing it, but being an individual or beginner it is different. On individual investment level, it can be as simple as keeping aside enough money to buy new shares every month. A clear-cut investment is having suffix knowledge about the exact amount of money to be invested in a specific time frame, which will lead to successful investment.
This video may help in setting your Financial Goals.
Don't pretend to be a speculator. Speculators invest after analysis of short term performance and change their strategies according to the frequent developments. A genuine investor plans to achieve long term goals and does not get influenced by random speculations. Unlike speculators, successful investors take advantage of market volatility by selling their securities at high prices and buying them at low prices.
An investor should show responsibility and remain disciplined to keep their investment choices safe and not getting drawn away by constant market fluctuations.
Watch this video to get help in becoming an Investor.
It is nearly impossible for any successful financial fund or institution to make money by exclusively trading stocks. Presently mostly funds and individual traders use call options and put options to generate multiple trading options that could increase chances of their investmentsuccess. Actually the main point is that it is extremely difficult to generate a continuous return from one asset class.
Types of investments, you should know.
Following successful investors mapped out a successful investment plan supporting your goals and stick to it. Dedicate a certain amount solely to buying calls, trading iron condors, selling puts, etc. This theory of allocating funds stays consistent to follow some of the major principles of business or trade expansion which is again a common trait of successful investors.
It is wise to hold back from investing too much on an investment opportunity; similarly, keeping in mind the allocation of suffix capital for gaining profitability. Keeping a balance is a much-needed approach in investment plans.
Price fluctuation is a natural routine in investment. Successful investors expect negative performance periods. As positive returns achieved by the stock market contains some of the severe losses. Definitely, everyone yearns for positive outcomes and nobody likes to loose. Speculators become fearful when the market is down and the media inflames those fears. Influenced by this, many investors join the depression state just like the speculators.
If you understand that price fluctuations are inevitable and can predict the loss; then you can surely reduce the chances of mistakes at the very crucial times.
Even in positive market trends, significant losses are expected to occur. For instance, in the stock market, professional investors and traders understand that any economic event or the financial report may not be able to influence any financial commodity or equity index that could lead the return to any individual investment reach 500%. Because such returns don't really exist and successful investors understand the facts. Instead, a realistic expectation towards a handsome return helps the professional to keep on a successful track.
If you are assuming trading options are easy to handle and you don't expect any hurdle along the way; then we suggest you not to invest in the first place. Investments are not guaranteed to work, but their odds may work generally if you increase the time horizon.
For instance, you buy a house to resell it but then its value goes down in a month; now you can sell the house and bear the loss or wait for a longer time to get a handsome return without worrying about the short term market fluctuations.
Investment is just like a roller-coaster ride, it has its ups and downs. Professional investors take this roller coaster ride for a longer period of time; understanding that staying for a longer time will be of extreme importance.
Most importantly, if you don't have any exposure to the market then your chances of being successful are much less. For this purpose, it is recommended to present in the market or many different markets for a longer period of time.
If you are afraid to lose then you can't play, and the problem is you can't win without playing it.
Watch this video to learn how to stay in market.
Mostly short term stock market movements are random and extremely unpredictable. Even this does not restrict the "experts" from future predictions which make it more disastrous. Investment history is rich with examples of poor decisions and performances because they were made upon under influence of short term market dynamics.
Warren Buffet states his opinion about investments that it is essential for people to realistically define the aspects of investment rather than not knowing anything. This may sound illogical but realizing the limits of your knowledge and ability to predict can help abstain from terrible mistakes.
The following figures have been taken from Intelligent Capital Works :
· 1998 - The S&P 500 lost 19% in just 6 weeks. Then rallied, ending the year up 26%.
· 2003 - S&P 500 started the year down 8%. Ended the year up 28%.
· 2010 - S&P 500 up 13% for the year, but experienced a loss of 16% in less than one quarter.
Poor investment decisions result from portfolio evaluations. It doesn't make sense to measure the distance between Chicago and New York using inches. Similarly, short term metrics are not wise to evaluate long term investment strategies.
Successful investors don't get influenced by short term market performance to forsake their investment strategies. The more you evaluate your portfolio and test your strategies there is always a chance of adjustment which will lead to severe damage to your long term performance.
When it comes to investment successful investors know their flaws and the cost of being wrong. Being optimistic you should know the potential risks of your decisions and choices. It is natural to seek information that affirms your decisions and ignore contradictory opinions. Without an open mind, it is impossible to review your decisions and the risk associated with them. No investor can always make perfect decisions; according to John Bogle (founder Vanguard Group):
"Successful investing involves doing just a few things right, and avoiding serious mistakes."
Definitely, nobody likes to take risks. In times of doubt, we look for information and opinions which could provide us confidence and make us feel certain. When you frequently hear something then it becomes your belief. It is a possibility that the things you get to hear frequently are well fabricated and well-publicized to make you believe it to be true. Additional information may be relevant but it is not always helpful. The fact is that there is so much information out there that it gets difficult at times to find out the facts and cast out the irrelevant ones.
Learn financial strategies from Dr. Jordan B Peterson, in this video.
Before taking a start you must evaluate how much you can afford to lose? This requires some serious thought. You may get to experience certain losses and they may be large. Investors who lose more than they expected; tend to sell at the wrong time.
Successful investors are always aware of the losses they can withstand and select the best possible strategies to minimize the possibility of surpassing that threshold.
Taking actions and making strategies to limit future losses while experiencing losses is a great approach.
The best approach to become a successful investor is to buy low and sell high. Though it seems easy to say and nearly impossible to do. It is easier to purchase when the market is following the increasing trend. Definitely, nobody wants to buy a security which is following a downward trend.
The most successful investors follow Warren Buffet's advice:" Buy when others are fearful and sell when others are greedy". Though this is contradictory to the human brain but successful investors do create such investment strategies in which they don't follow the market trend and buy securities at lower costs. It may seem a huge risk but in the long term this investment pays off well.
Watch this video to learn about investment risks and its types.
About Tony Joshie
Tony's journey as a blogger began several years ago when he discovered his love for the visual arts. Fascinated by the stories behind the masterpieces and the artistic techniques employed by renowned artists, he started sharing his thoughts and interpretations on his blog.