Investing is not for the weak or squeamish. It requires discipline, a strong stomach, and a willingness to wait things out. And if you want to become more successful as time passes, it’s smart to develop a plan of attack.
The Path Towards Improvement
The margin between a moderately successful investor and a savvy investor with a track record for success isn’t as large as most think. It’s a pretty thin line that’s made up of lots of tiny variances and moderately advanced skills. Thus the key to becoming a savvier investor isn’t to take massive strides, but steady steps forward.
In light of this understanding, here are some simple steps you can take to become a savvier investor over the next 12 to 18 months.
1. Take Online Courses
It’s always important to admit that you don’t know everything. And one of the most practical ways to do this is to place yourself underneath someone else’s teaching.
Today, you don’t have to sign up for classes at a community college or enroll in a formal class at a local educational center – you can simply do it online.
Want to learn about commercial real estate and investment? Sign up for a six-week online course and learn from real estate professionals who have decades of experience.
Want to learn about trading options? Enroll in a yearlong options trading master class and fully immerse yourself in the process.
There are people out there who have expertise in the areas you want to become more skilled in and they’re often willing to educate and teach – for a price. If you’re willing to spend the time and money, you can become a savvier investor.
2. Join Investment Clubs
In an online course, there’s an instructor-student relationship. It’s also helpful to develop peer relationships with other investors – some who are more experienced than you, some who are less experienced, and some who are on your level. Investment clubs are great for this.
Investment clubs take on any number of flavors, but are often locally-based groups of like-minded people who come together to network, discuss opportunities, and even pool resources together. Not only will you learn a lot from the right investment clubs, but you’ll also come into close proximity with opportunities that you otherwise wouldn’t have had.
3. Diversification Matters Most
Diversification gets discussed a lot, but most investors push it to the back burner and get caught up in sexy investments at the expense of spreading out risk. This is a big mistake. As boring as it sounds, diversification is a must.
“Although investors tend to hem and haw about whether to buy this stock or sell that fund, research shows that 88% of a portfolio’s ups and downs over time are explained by its asset allocation; only 12% have to do with security selection or market timing,” Anne Kates Smith writes for Kiplinger. “With stocks, you’ll want to consider different investment styles, company sizes, industries and countries. With bonds, go for varying maturities and levels of credit risk.”
Make sure you’re promoting some healthy give and play between the individual assets you invest in and the types of assets you integrate into your portfolio. Both should be given significant weight.
4. Learn New Markets From the Inside Out
When it comes to investing, you don’t have to be an expert in an industry to invest. However, it is wise to have some knowledge of how it works and what the major trends are.
If you’re considering entering a brand new market – particularly one that’s emerging – take the time to learn it from the inside out. Read books, listen to podcasts, and speak to business owners. You might even attend conferences or visit companies and let them walk you through their facilities. You’ll learn a lot more with this approach than you will by studying a boring prospectus.
5. Nurture the Right Soft Skills
Investing is highly technical, but it’s also relational and intuitive. There are certain aspects of investing that can’t be mastered without the right soft skills – so make sure you’re nurturing them.
The most important soft skills for investors are communication, decision-making, problem-solving, leadership, teamwork and collaboration, time management, and work ethic. Also, don’t underestimate the importance of empathy and how it helps you relate to others.
Never Stop Learning
There’s no finish line. As an investor, you must constantly improve and continue to enhance your skillset; otherwise, the industry will pass you by. Whether it’s taking online courses, joining investment clubs, nurturing soft skills, or anything in between, growth must be a lifelong priority.