There are many successful investors around, each of whom has his or her own approach to investing. However, the greatest investors all have some common traits—and they are traits that you can acquire as well.
Patience
Stock prices go up and down every day, but the value of your underlying investments doesn’t move nearly as much. All companies experience prosperous times as well as hard times, and the larger economy also has its ups and downs. But if you buy a good basket of investments, over time the winners will outweigh the losers.
Invest in what you know
This doesn’t mean that you need to understand the ins and outs of every business, but it’s generally good advice stick to things that make sense to you. Stay away from herds, because they tend to chase what’s popular now, and by the time it’s popular it is usually overpriced. If it doesn’t seem to make sense, it probably doesn’t.
Consistency
Create a plan and stick to it. The best way to invest is adding to your investment over time. That way, even if you come in at exactly the wrong time, you can buy on the down slope and get a good average price.
Know your limits
If you don’t have the ability to watch the value of your portfolio bob up and down in the short term, stay away from investments with rapidly changing prices, because you won’t be successful. If you aren’t prepared to dive into company financials or investigate an industry, then stay away from individual stocks—mutual funds are your best bet.
Don’t invest what you have and need for what you want
Investing has its place in your financial life, but so do savings and cash. We all have emergencies in our life, and we have short-term goals. If you invest money that we need in the short-term, it’s hard to be committed and patient–and if you can’t be committed and patient, it’s hard to be a successful investor.
Image via HarshLight
