Profile of the Successful Investor

Successful investors aren’t necessarily any smarter or better at analyzing financial data than anyone else. They don’t have to have degrees in financial planning or business. Many of the most successful don’t have any college degrees at all. But they do generally have some things in common which make them successful at what they do. Here are four characteristics that you can imitate:

  • Successful investors have a plan for investing, and they stick to it. It’s very easy to be tempted by a tip about a hot stock that’s reported in all the financial magazines and websites. But that isn’t the way that successful investors make money. They look at their goals, time frame and knowledge to devise a plan to suit their own needs. For example, if they’re 45 years old and have twenty years until retirement, they implement a 20-year investment plan. Then they gather as much information as they can and invest in things that they know about and are comfortable with. If they don’t understand a particular type of security, they don’t buy it. They only buy investments that they’ve researched or that someone they trust has recommended, and they don’t listen to the financial media. This is how they stay with their investment plan.
  • Successful investors invest consistently. To succeed year after year, they know that they must keep their money constantly growing. They generally use two methods to do this. First, successful investors buy stocks or stock mutual funds, knowing that stocks are the only security with the long-term power and track record to grow their money year in and year out. Second, they keep adding to their investment principal regularly. When you continue adding to your principal, your financial nest egg is virtually guaranteed to grow. One of the most efficient ways to invest regularly is with a system called dollar cost averaging.
  • Successful investors are patient. It often takes time for a good investment to show its true value. Successful investors understand this, and therefore do not get caught up emotionally with the daily ups and downs of the market. They know that success is a long-term race and as such, patience is essential. They don’t jump in and out of investments in an effort to time the market. They buy investments that are high in value and hold on to them until that value is realized in the market. They don’t expect instant growth, so they aren’t disappointed by temporary setbacks when they come.
  • Successful investors are not emotionally tied to their investment positions. They know that to be successful, they must be unemotional. No matter how promising the investment was when first bought, no matter how they feel about it, they know that selling at the right time is just as crucial as buying. If an investment has consistently lost money, they don’t try to recoup their losses. They know that it’s necessary to cut them and move forward. Likewise, if an investment has made lots of money, successful investors know how to protect their gains. They are aware that nothing goes up forever, and they are able to sell a moneymaker when the time is right.

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