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Things To Consider Before Becoming a Full-time Investor

Even the most successful investors weren’t produced in a single day as they would have their own shares of struggles and failures to become where they are now. You ought to consider your investment career same as a long journey. A journey involves planning for the destination and later preparing the routes. The same applies to investment. Investment is a long journey with lots of ups and downs ahead. With patience and an experimental approach, you can become a successful investor on your own terms. Let’s take a look at the things you need to consider before starting your investment career.

  • Build Your Portfolio :

An investment portfolio is a bundle of assets that can hold stocks, bonds, or any other financial assets. By combining these securities in a way that reflects their risk tolerance and financial objectives, investors strive for a return. As some are built into 401(k)s, IRAs, and annuities, there are several different types of investment portfolios while others operate on their own through a brokerage or financial advisor company. Consider partnering with a local financial planner who will direct you through construction for more hands-on assistance.

Portfolio Investment can be divided into Strategic investment and Tactical approach. Strategic investment involves buying financial assets for their long-term growth potential or their income yield, or both, to hold onto those assets for a long time. The tactical approach requires active buying and selling activity in hopes of achieving short-term gains. Diversification is a way of distributing your investment around so that your exposure to any form of property is restricted. This method is intended to help you reduce the uncertainty of your portfolio over time. Diversification protects the investments from inconsistencies in the economy.

  • Be patient there is always time to grow :

Growing up, we all have been waiting for that moment to be financially independent, to earn on our own, and to hold conversations with adults. We all have evolved from a child to a fully-grown adult capable of taking important decisions. An investment should be treated the same. It can be likened to the process of metamorphosis, in which a butterfly goes through four stages of development. It is all a part of growing up and attaining maturity. You need not be in a hurry to develop your investments, the main thing you ought to focus on is attaining financial independence. Not all of your investments might pay off but spending too much time worrying about what went wrong isn’t worth the time since it is all part of the growth.

  • The lesser emotionally attached you are to your investments, the better :

Getting too emotionally to anything or anyone, be it your friends, your pets and belongings will only have you end up getting hurt. Because by nature, people constantly change and their opinions change. Your so-called friends won’t be there for you like they were when you all were planning to bunk classes during your college days. Your beloved pet is going to die someday and that is the truth.

Likewise, don’t fall in love with all of your investments. The world is going to change. Views are going to change. Assets, industries and asset groups that have yielded fabulous returns in the past will not do so in the future. Confront your own truths. A friend who has made a lot of real estate money in the last 15 years is still in denial. He always feels it’s the best place to make money. Maybe he’s right, but if he was only a little more open to other investment ideas, he wouldn’t be trapped with illiquid assets.

  • Don’t fall into the trap of survivorship bias :

Survivorship bias is something that makes you concentrate on only “positive things” or people who have succeeded while overlooking those who have not. While being positive and optimistic is a good thing, Survivorship bias is something which shows that you are afraid of failures and you refuse to come out of your comfort zone. This shouldn’t be encouraged and a good investor must learn to cope up with failures and should also learn from his failures. Taking a look at people who have faced failures will also give you an idea of how not to do an investment.

  • Discover your investor profile and investment strategy :

Getting a strong understanding of who you are as an investor can allow you to make investment decisions based on your investment background. It’s also a perfect way to prevent knee-jerk responses to uncertainty and stop behaving out of emotion and making the wrong decisions.

Conclusion :

The market is difficult to foresee, but one thing is certain: it will be unpredictable. Learning to be a successful investor is a slow process, and the investment path is generally a long one. At times, the market is going to prove you wrong. Accept this and learn from your failures.

Author

Ashutosh Gupta

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