If you want a shot at becoming wealthy, you need to do more than simply earn money. Most importantly, you need to hold onto the money you earn. And then, you need to grow your money. In order to grow your money, you need to learn how to invest.
Though the list is actually much longer, as a general rule, there are things you should seriously consider doing if you want to build a successful investment portfolio. Some of the items on the checklist may sound overly simplistic but they are vital to reiterate because too many new investors think they can ignore these rules and still do well. It rarely works out in their favor.
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You must have heard of the 80/20 rule isn’t it? This rule was discovered by Vilfredo Pareto, an Italian Economist in 1897. He came up with this: 80% of our success comes from 20% of our efforts.
But when it came to money and investing, 10% of the people had 90% of the money and these 10% are not just filthy rich, they are seasoned investors.
The specifics of how you implement each concept will differ based upon your own personal situation, so it is important that you seek the advice of a qualified tax professional and investment advisor.
Secrets of Building A Successful investment
1. Getting Started in Investing
Successful investment is a journey, not a one-time event, and you’ll need to prepare yourself as if you were going on a long trip. Begin by defining your destination, then plan your investment journey accordingly. For example, are you looking to retire in 20 years at age 55? How much money will you need to do this? You must first ask these questions. The plan that you come up with will depend on your investment goals.
2. Don’t Think Like An Average Investor
In popular cases, money doesn’t make one a rich investor, it is their structured thinking pattern and idea. There’s a clear difference between an average investor and the rich investor. That difference is, the rich investors do the exact opposite of what everyone else is doing.
For instance, most investor say: ‘don’t take risks’, but that’s exactly what the rich investors do. Most people say ‘diversify’. The rich focus.
This thinking pattern of the rich investors is the gap that must be filled by average investors to enable them become successful investors.
3. Decide On a Clear Objective for Your Investment Portfolio
You need to know what you expect of your money. Otherwise, you are going to be like a rudderless ship at sea; no direction, no purpose. That’s a terrible situation in which to find yourself, especially as you begin to draw closer to retirement.
4. Keep Investment Turnover to a Minimum
As the saying goes, don’t rent stocks, buy businesses. Turnover has been shown to correlate with poor investment performance. If you aren’t willing to own a business for at least five years, don’t even consider buying shares unless you fully understand, and accept, that the short-term stock market is irrational, volatile, and capricious. You should want to hold things that grow more valuable over time, producing higher earnings per share and fatter dividend checks.
5. Determine What Investment Strategy Works for You
Nobody knows you and your situation better than you do. Therefore, you may be the most qualified person to do your own investing – all you need is a bit of help. Identify the personality traits that will assist you or prevent you from investing successfully, and manage them accordingly