Investing is not about earning money instantly. To some, it is a game in the finance world. It’s either you win, or you lose. To win the game, it needs a great plan, skills to execute, and a coach to help you guide and achieve your goal of winning.
It’s the same thing in investing. It’s not about earning money in a blink of an eye just like when you get fast cash from a moneylender like cash mart. It’s about planting a seed over time, and you’ll harvest the fruits at the right time.
In order to become a successful investor, you need to have qualities. The skill on how to invest, and traits you must apply to yourself.
It’s a commitment not to a short-term goal, but rather a long-term one.
Here are some qualities you should know and apply as you invest.
You must know more about the market.
How can you invest in something that you don’t know much about, or worse, you know nothing? How can you be sure that the money invested in a company will give you a good profit? There’s a lot of things you should understand before you invest.
It may sound like a given, but you will be surprised with a huge number of newbies jumping right in without understanding how investing works.
First, you have to gain a deeper knowledge of the market that you’re going to invest in. Examine it’s stand by doing research. Analyze the position of its funds and the company’s strategy and philosophy.
The purpose of these is you need to know where your invested money is utilized. With your research and, of course, reliable sources, you would be able to see the growth pattern of the company over the years.
It’s lifelong learning. To clarify, it’s a process you have to monitor and understand. If you are an active learner, it will give you points to get the right choice and it will mold you to become a good investor.
Warren Buffet, a known investor and finance influencer around the world, said that you have to look for a company that’s high-quality. The price may be huge, but it’s worth the price tag.
Losing equals to winning
Who would want to deliberately lose in a game? Everyone aims to win a game. But in the investment world, it’s more intense.
Investors are prone to losing a game like playing in a casino. This is why many are afraid to invest. They think that they will lose their money, and will have a hard time winning it back.
To invest, you have to accept losses. This is about decision making. Sometimes we make the wrong step.
This is the bitter truth: mistakes happen.
Here’s what Dennis Gartman advised to potential investors.
What will you feel if you see the first sign of profits? It’s exciting and you might choose to sell. What you’re going to do is to not sell. Just let the winning trades run.
Second, if you made money in the market, it’s okay to lose a little bit of it. But losing a lot of money is a different story and it’s not okay. Let winning trade run and get out of losing trade quickly.
Profit depends on time. We are all aware that the price moves depending on the current scenario of the market. With this, as an investor, you have to know every update about the market activities and growth. You will be able to overlook their plans and decide the term of your investment if you understand the trends.
To be a good investor, you have to understand the current trends. And as mentioned earlier, you have to know the company’s market. If you made a mistake, own it and don’t let it happen again. This is about doing what is right.
Understanding the Risks in Investments
One crucial skill in investing is decision making. You have to appropriately understand the scope of investing. Part of it is the risk and it’s inherent.
By knowing that risks in investments are intrinsic, it will help you understand the company’s plan. You can also analyze their expected returns.
It’s like understanding human psychology. Good investors understand the psychology of investments. Because it can influence buying and selling decisions. With this, you will get chances of keeping away from mistakes.
Don’t put your eggs in one basket
It’s common knowledge that diversifying is one way to reduce risk. But it’s not applicable all the time. It is a good rule, but in some cases, it can also diminish your profits.
Here is what Bill Gross, one of the great investors, taught.
Some of your investments might make a big move, but others don’t. For instance, 40% of your investments made a great profit. But 60% of your investments did not.
Earning profit is about taking chances based on proper and reliable research. You have to balance your investment portfolio. Keep some of the cash in your account if you see big opportunities that need a bigger capital. Stick to what you have researched and believed that it is pointing to a big profit.
Yes, it’s a roller-coaster experience.
But if you possess the qualities mentioned above, you will be able to ride on and enjoy the flow.
You’ll acquire all of these by learning and executing skills. It may not be as easy as you thought. But doing investing will benefit not only you but also the next generations to come.