6 Secrets of Successful Investors
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Learn the Secrets of Successful Investors
Do you consider yourself a successful investor? Or, do you equate the stock investment market as a bad odds lottery where you will probably get "Madoffed"? If you do blind betting, you are right. But with just a little work, a little digging, you can learn the secrets of successful investors. More so, in today's internet world when information formerly only available to brokers are now accessible to those who have internet. You can even subscribe to information that are already well researched in the type of investments you want to focus on. You can sign in as a member in one of those internet sites where people share current information and where you can ask your questions and get answers from all kinds of people. You can follow some of the expert investors' blogs.
Successful investing is not just luck. It's not even primarily luck. But it has a high emotional component and if you don't manage yourself, greed and fear take the place of blind luck.
Investment is about your retirement, your family's welfare, your children's education, your health and everything important to you. In short, it is your life. So, take the responsibility and start the fun.
The Definitive Book on Value Investing
The Book to Start Reading Now
The Intelligent Investor: The Definitive Book on Value Investing. A Book of Practical Counsel (Revised Edition)
Amazon Price: $10.16 (as of 05/25/2012)
This gives you the basics of understanding Mr. Market as the author calls it and the basics of working in it. Read his advice on fundamental analysis and the things you need to know to
Successful investors make stock investment a family affair
A powerful investment team always succeed
When we started active engagement in the stock market, my husband thought we were just going to blow our savings so we limited it to the amount I could play with to a sand box allocation. He was firmly committed to high risk Government Savings Bonds (hahaha) and heart attack level Money Market Funds with their earning just a bit south of their management fees. But you have to involve your family so you grow together in managing your finances and growing your wealth.
But in two years and with a bit of hands on experience, he became a semi-convert. He still sets aside a bigger amount that we don't put into stocks but he now researches many of the stocks we invest in. He is much better than I am in this as he knows more of the products and companies as well as the bigger economic picture. On the other hand, he has the sangfroid of a jack in the box, so once a stock has been bought, he is completely ignored beyond his panic based incontinence. So, he has a role, I have a role, he deals the cards and I make the bets. And it works.
Interested in involving your family in your investment?
Here is a lens that talks about that
Things you need to know
Before you invest
The Successful Investor Today: 14 Simple Truths You Must Know When You Invest
Amazon Price: $2.89 (as of 05/25/2012)
This book details the things you need to know before you put your money in the market. But he also emphasizes the need to be comfortable with the risks and complexities of the market. For me, this takes time thus the need to start early so you get more comfortable and not be ruled by your fear and greed or that of others. I like what he said that indeed, there is no one right portfolio, only what is right for you.
Secrets of successful investors
Here are a few lessons we have learned from our experience.
1. Do your own research
Make your own decision
Do no listen to the taxi driver or the stock brokers on television trying to tell you what stocks to buy. Do not go and buy when your friend tells you he has gained a lot in a particular stock. Chances are those stocks are already overpriced. Do your own research. Start Googling stock investors who are successful and read what they do. Begin to understand the terms they use. Watch Bloomberg and CNN-Business. Read Forbes web site. Just don't jump and buy a stock that their guests pump up there before you have researched it yourself.
In investment, do not follow the crowd
As Buffet said, Be greedy when people are fearful and be fearful when people are greedy
Latest news on investment
Update yourself
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2. Choose stocks you know well
You don't have to go far to understand the market
Maybe the company you are working for is doing very well. Why not start with their stocks? Do they have clients knocking at their doors? Do you see the management doing their best? Are there backlogs because of so many orders? What new products do they have?
What car do you use? Television? Smart Phones? Utilities? Computers? Games? What is your area of work? Your hobby? What products or tools do you use? What products or tools do you see people are buying and using? Who makes your shampoo, make-up, shaving cream. Have you heard of rare earths? If you haven't, don't go for it. Why did Carterville buy MWM? If you don't know, read. What is a 787 and who sells it and how is it doing? Don't know? Read the flaming paper! Really, you don't have to go far to understand the market.
3. Learn about DRIPs
Save yourself trading fees
Have you invested in DRIPs
Dividend Reinvestment Programs
DRIPs allow you to buy stocks of companies directly from the company or from its investment arm. The value of this program is that you do not pay trading fees each time you buy stocks. Your dividends keep buying new stocks. You need to buy the first stock from your broker or from a brokerage firm or other companies sell them directly. You need to pay the fee the first tme you buy the stock from a brokerage but after that you can buy more and no fees are charged.
The Dividend Reinvest Program
Learn more
- DRIPs: How to Invest in Dividend Reinvestment Plans
- But if you really want to boost your returns, investing in DRIPs - dividend reinvestment plans --is a safe, steady road to building true wealth. The best part is that it usually can be done without brokerage commissions or fees, and is often at a 3%-5% ...
- 7 Dividend Champions With Strong Sales Trends
- We began by screening for "dividend champions," companies listed by DRiP Investing as those that have consistently raised their dividend over the last 25 years. We screened these stocks for those paying dividend yields above 2% and sustainable payout ...
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- 'I don't care too much where the market goes'
- He has since become passionate about dividend stocks, and meets regularly to discuss them and other investing matters at a Canadian MoneySaver ShareClub. Aside from their still-respectable yields, what makes dividend stocks appealing to Mr. Sidhu is ...
Watch the investors track their stocks
Tracking trends is key to your investment
4. Manage Fear and Greed
Have a strategy and stick to it
When you see a stock you are following go up $6. Don't rush and buy it to catch a sky rocket. Chances are this will go down again. Track it and put an order for the price you want to buy it. What range has it traded in this year? Who are its competitors and how are they doing? Decide on the price after you have researched the stock's chart. Many finance sites offer this. Your own bank may have a great site. Ours does and it gives you some protection from Mack the Knife or the howling doofi of CNBC! Also find out from the company what they have in the pipeline. So you have a sense of its future. Do not get into a stock because it is now priced low. It might never recover.
When your stock has reached a profit you are happy about and you don't see any future meteoric rise, get out and take your profit. You can reinvest the profit into another stock that you think will have a better chance of rising higher.
Sometimes, we stick to a stock because it is the first stock we have in our portfolio. Loyalty. Or because it has delivered us so much profit. When you have gained enough, take some profit. The best is to sell half of your stocks first so that if the stock goes up further, you still participate in the gains. If it goes down, your losses are minimized.
The Wall Street Greed
How it Created the Global Crisis
The Monster: How a Gang of Predatory Lenders and Wall Street Bankers Fleeced America--and Spawned a Global Crisis
Amazon Price: $4.79 (as of 05/25/2012)
This book shows us how Wall Street created more investment instruments to get investors to but into risky investments rated high by supposedly reputable rating companies. How did this happen? Read this book.
5. Understand taxes and fees
These can eat up your profit or leave you in the red
Many people got into the revolving door of day trading once. But when you get your report and see that the only one who profited was your broker, you will be heartbroken. Know how the capital gains from your stocks are taxed so you can incorporate this in your strategy.
If you are trading in various currencies, you have to look into how rates eat at your profit. To offset this, I have two trading accounts, one in US dollars and the other in Canadian dollars. If you trade in Euros and Pounds, it is better to keep the accounts separately in each of those currencies. Otherwise, the transaction fees and exchange rates will just take all your gains and leave you with more losses.
6. Review your portfolio regularly
Review based on solid research
Gone are the days when most investors have the patience to buy and hold on to their stocks forever. However, look at the most successful companies and their capacity to re-invent themselves as the world changes around them. Some go through creative destruction every generation and they can be solid bets. Remember IBM? Any idea what they do now? How about 3 M or Purolator?
But a regular review of your stocks is really important as there are some inflexible dogs just waiting to dig their own grave. Remember Nortel? Palm Computer? Wang? Of course, this review must be based on your research. Read more on your stocks and the sector where you are invested so you can be better informed in your decision.
Portfolio Review
Do this regularly
It is important that you regularly review your portfolio and re-adjust this when necessary. But inform yourself accordingly so you make more informed decision.
7. Start small but early
As you invest, you grow in confidence
The best lesson is to start your investment small and early. You become more confident as you do it and your chances for success are much greater. Many of us wait until we have so much money to go into investment. We don't realize that TIME is of the essence in investment. When you start young, the compounding interest of your investment will surprise you. Whatever extra you have, put this in an investment account. Or even better, pay yourself 10% of your monthly income and put this in your investment account. Your banks offer many choices. Ask them for advise. Look into fees. Sometimes, the banks offer higher interest for your money in the brokerage account. Just put it there and when you are ready to buy your stock the money is there.
Knowledge, experience and confidence will bring you better chances for success. Involve the family so it's a team sport with everyone looking for a good idea. One family dinner a week, a month whatever to talk about investment management and teach your kids while YOU get wealthy!
To learn how to be a successful investor
Visit these lenses on investment
To be a successful investor
You need to keep up with investment news
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- By Ainsley Thomson A small speck of encouraging economic news was lurking in today's grim numbers from the UK's Office for National Statistics: Business investment rose £1.1 billion, or 3.6%, to £30.8 billion in the first quarter compared to the last ...
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- According to a new report, an investment firm named Capital Research & Management was warned of Facebook's dour revenue forecast, allowing it to cut back on the shares it bought in the IPO. by Don Reisinger May 24, 2012 5:24 AM PDT As more details ...
Discipline
The key to succesful investing
Here are some links on becoming a more successful investor
Follow these links
- How To Review Your Mutual Funds | How To Do Things
- Take a deep breath. The markets look terrible! Your retirement program looks desperate! The professional managing your money has tanked along with your hopes, your aspirations and your confidence. Â However, experience tells us that the world probably will NOT end! Yet! If you have a 401(k) or a Reg
- How to Start an Investment Portfolio
- Do you want to know how much you'll need to start an investment portfolio? From stock to money investments, see tips on starting a financial account.
For you to become a successful investor
Here are some help
What others say about successful investing
There are lessons from these on investment success
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- "More and more, we are seeing advisors striking partnerships with ETF Investment Strategists and, as a key result, successfully offering to their clients institutional quality portfolios and product innovation that once were too expensive and ...
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- The National Crowdfunding Association, the oldest and fastest growing crowdfunding trade association in America, is comprised of a wide array of companies, firms and individuals who have an interest in the success of Investment Crowdfunding.
Share your thoughts on investment
Or just leave your comment on the lens
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ottoblotto Apr 24, 2012 @ 11:01 am | delete
- Well done!
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sousababy
Nov 14, 2011 @ 5:06 am | delete
- Thank you for the education. I know some 'drips' but not the kind that you present. I sure need to do more of a review of my portfolio.
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tssfacts
Nov 4, 2010 @ 11:33 am | delete
- Great advise. Lots of good information here for people to gleam from. Great job.
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