Do you want to be a successful investor [1]? Do you want to know how to earn a decent return and grow your money? We all want this but many of us have a hard time investing successfully. How do we do this? Is there a secret that we are missing? The truth is that investing is simple. We tend to make it more complex than it needs to be and as a result, we make bad decisions and as a result suffer with bad decisions and poor returns.
(Photo Credit: graur razvan ionut [2])
Here are the 3 things you need to understand in order to start investing successfully and see the results you want.
3 Tips for Successful Investing
- Understand that risk and reward are related.
I know you want your $10 to turn into $1 million [3] by the weekend. But it is not going to happen. Let me repeat that: it is not going to happen. Sure you can win the lottery [4] to accomplish this, but when it comes to investing, it will not happen.Risk and reward are related. The more risk you take on, the greater the reward. But this also means the greater the chance that you lose money too. So stop trying to hit home runs all of the time. Focus on hitting some singles and driving in runs that way.
For non-baseball readers, this means to just invest in high quality companies and add to them over time. This takes us to the second tip.
- Have a long term mindset.
If you want to be investing successfully, you need to invest for the long term [5]. What exactly is the long term? It is 10 years or more. This doesn’t mean you just buy and sell various investments over the course of 10 years and have your money grow.It means you pick some high quality investments and hold these same investments during this time. In both good and bad times, you stick with them and keep adding more money over time.
Too many times in the instant gratification society we live in we do not allow our investments to grow [6]. If our money doesn’t double over night, we sell and pick another investment. You need to stop this [7] and stick with your investments for the long term.
- Ignore the experts.
You turn on the television and there is some guy yelling at you telling you that ABC stock is a buy and you need to get in this thing. You need to ignore him and stick with the investments you chose. The reason for this is because the expert in television knows nothing about you, your finances, your goals or your risk tolerance. So how in the world can they tell you that a certain investment is right for you?They can’t. So you need to start ignoring them and trusting in the investments you picked and add to them over time.
Final Thoughts
If you can follow the 3 tips I lay out above, you can start investing successfully. The catch is you will see this success over time. It won’t show itself overnight or in two weeks. It will show up in time. When it does, you will look back, thankful that you followed the tips and be proud that you were able to grow your money over time to its current value.
More on Investing
- Why You Shouldn’t Focus on Income to Grow Your Wealth [8]
- 3 Steps That Will Lead You to More Wealth [9]
- 5 Steps to Figure Out a Successful Retirement Plan [10]
- Investment Tax: What it Means For You [11]
- How to Calculate Annual Investment Returns [12]
- Roth 401k and Roth IRA Limits [13]
- Can You Have a 401k and an IRA at the Same Time? [14]
- 29 Steps I Took to Leave the Workforce at Age 29 [15]
- Best Online Discount Broker Comparison [16]