What makes a successful investor?

By Shadforth Financial Group

Despite the popular perception there is no magic recipe to be a 'successful investor'. Like everything in life worth achieving, it takes time, patience and discipline. Successful investing is a continuous and evolving journey of learning. History is littered with many successful and unsuccessful attempts to master this process.

Here are a few tips to make the journey a little easier:

  1. Disregard the media noise as this will be an unwelcome distraction. Remember the job of the media is to sell newspapers not to provide you with financial guidance.
  2. Your money is like soap. The more you move it the less you will have. Buying and selling any investment involves transaction costs, tax implications and playing the game of chance by trying to time the markets.
  3. Slow and steady wins the race, so invest gradually over time using the well known investment concept 'dollar cost averaging'. This strategy involves investing regularly over time irrespective of market conditions.
  4. Don't listen to the backyard expert. We all have friends who have a 'hot tip' for you. Be very careful relying on this information as they are likely to be at the bottom of the information food chain and the price is likely to have already been factored into the price by the time you act.
  5. Don't put all your eggs in the one basket. Having a diversified portfolio is like having 30 pencils in your hand. If one breaks guess what? You still have 29 pencils left. If you have all of your investments in one share or managed fund it could get messy if the pencil breaks!
  6. Adopt an objective approach to investing and don't necessarily follow the crowd. Inevitably by the time the crowd arrives the 'window of opportunity' has often closed.

When looking to invest consider your objectives, risk tolerance and investment time frame. Remember the ostrich approach of putting your head in the sand is unlikely to make your journey a success.

Good luck! If you have any questions please don't hesitate to contact the Shadforth Financial Group.

If you like this article, please feel free to share it with your family and friends.

Educational guides