Being a Successful Investor!
Many studies have been conducted over the years to pinpoint the common traits of savvy investors. Here are five factors that these studies have identified as the keys to successful investing.
First and foremost, strive to spend less and save more. The more you tuck away each month, the more wealth you will accumulate over time. To put this advice into action, always pay yourself first. This means putting at least 10% of your income from every paycheck straight into a retirement account. Then, make sure your expenses don’t exceed the remaining 90% of your income. Cut back on your spending if you must to make sure everything else gets paid.
We’re inundated with information 24/7, so it can be hard to ignore all the noise out there. However, as the old Bobby McFerrin song says, “Don’t worry, be happy.” Stop worrying about whether a bubble or a crash is happening right now. Stop worrying about what might happen with the market next week, next month, next quarter, or next year. Studies show that even if you invest at the market peaks each year, you still wind up with great, long-term results.
When you start investing early, compounding interest has time to work its magic. Here’s what happens: Say you put $10 into an investment account. The balance grows by 10% in year one, so now you have $11. The balance grows by 10% again in year two, but you don’t make $1—you make $1.10. This compounding effect leads to a sizable amount of wealth over an extended period. Starting 10 years earlier than someone else could result in a much more sizeable retirement account.
The world is not going to end if your investment account loses value from one month to the next. And if it does, then your financial plan doesn’t matter, right? All jokes aside, understanding that you need a positive outlook helps you stay the course as an investor.
Over the past 100 years, the markets have certainly seen ups and downs because of world wars, recessions, presidential assassinations, pandemics, and everything else you can think of. And yet, the trajectory has continued to move upward. Remember, the market represents the value of companies that produce high-demand goods and services. So it’s really no surprise that the market continues to trend upward over the long-term.
Have a Steady Temperament
Temperament cannot be learned. Rather, it’s an innate characteristic of your personality. A steady temperature allows you to consider the bigger picture and not lose sight of potential growth, even during periods of extended market upheaval. Others may get swept up in their emotions, but successful investors never abandon their discipline.
Looking to accumulate more wealth in 2021 and beyond? Turn to Nelson Financial Planning. We have over 35 years of experience helping our clients enjoy cost-effective financial plans and superior investment results. To schedule your free initial consultation, please call us at 407-629-6477.