1. Be Constantly Learning.
When people are excited and interested in something new, they are anxious and impatient. They want to be able to become an expert overnight and then go on to do those things they were excited about.
However, this is not how the world works.
Instead knowledge is acquired over the long term, with people picking up small details and nuances each day, expanding themselves and improving their skills. This is exactly what you need to do with respect to investing, picking up ideas every day to improve your ability to see opportunities, and just as importantly, take them. So, we’ve established its important to keep learning, but how…
2. Listen to those who have done it before.
All the skills needed to become successful at investing are already out there, and have been collected by so many individuals. People like Warren Buffet, Gary Vaynerchuk and Mark Cuban have already found the right combination of skills to produce results, and they happily share it with others, through books, interviews and presentations. These are great sources of advice and experiences that you can use and apply to yourself.
I can’t stress this enough:
Remember, what worked for these people might not work for you. You may have a different style that suits you and that’s perfectly fine, even encouraged, if it allows you to excel.
3. Know the terms.
How are you going to take on the advice of these people if you don’t know what they are talking about half the time? That’s right, you have to sit down and learn your vocabulary like back when you were five years old. Luckily for you, we have a top 10 investing terms to get you through the basics. In the long term, knowing what all these terms mean can give you a great edge as you will be able to see the very best investments from all the data.
4. Join a discussion group.
Join a university society, social media group, or a local area group. Having other people to exchange ideas with is very important. These groups may have people who are experts, intermediates or even novices, and having discussions with these people can give you fresh perspectives. For example, if the group were discussing a certain stock and were deciding on its investment potential, the experienced investor may look at it’s in depth financials and decide upon those, whereas the beginner may look at the business concept.
This is important:
Both arguments can be of value to you and as a result you may be able to improve your process of choosing an amazing potential stock.
5. Follow the news.
Information is key, refer to point 1. Be always learning. An excellent way of getting new information is to follow the news. Not the general news, but specifically business and financial news. This way you can follow the big stories and see how this is affecting the top analysts. For a recent example, as of time of writing, how is that $2bn fine affecting the top analysts position on Google, are they buying because they feel the fine is just a bump in the road or are they selling because it could weaken Google’s position.
Again, it is important to remember what works for these people may not work for you, a theme that you can see is occurring. It’s critical that you invest on your own terms, and do not follow through on an action because of one person’s opinion, but instead look at all the facts and opinions and then come to a decision yourself. You can diminish the chance of being swayed by someone by…
6. Have a plan.
Having a plan is not essential to someone who wants to invest. However, it is essential for someone who wants to have an investing strategy, and a strategy is highly encouraged.
The key benefit of a strategy is that it gives you direction and targets.
Direction could be for example am I going short, or am I going long, am I investing in a growth business or a value business. If you don’t know what these terms mean, again I will refer you again to our top 10 investing terms. This allows you to plan for events such as the stock price going down or going up. Targets allow you to mediate your feelings, for example, if you invest $1000 into a company, and the very next day the company’s director announces some job cuts resulting in the stock price dropping 5%. This would mean a loss of $50 to your portfolio, and without a plan you may feel inclined to keep what you have left and sell to minimise losses. This could be the wrong decision, what if the job cuts were a product of company restructuring to help maximise profits by getting rid of deadweight. If your plan is to invest in the long term, this small setback won’t matter to you and you will have the will to hold onto the stock and get a profit in the long term.
7. Actually Invest.
One of optimum ways of learning is by doing. By investing some of your hard earn cash, you will automatically care about it more. You won’t want to lose it, so you will do your homework before investing in that stock, before investing in that house and before investing in that business. And, if you make a profit on it, you will know you’ve done something right, and you can use that skill next time. But, even if you make a loss, you will know you have done something wrong and you will know not to use that skill in your next endeavour.
It’s not over yet…
Even executing just a few of these tips will help you to improve at investing. But remember, your learning is not over yet, see tip 1. And to help you go further why not have a look at some of our favourite books on investing to help with your knowledge.