On a superficial level, it often seems that the best strategy for making money from investments is a combination of picking the right ones and your timing. While there’s some truth to that, the most successful investors build a foundation based on knowledge, discipline, and realistic expectations.
5 Factors for Investing Success
1. Commit to Saving
The first and most difficult obstacle most investors encounter is saving enough money to get started. Making a commitment to cutting discretionary spending or paying off high credit card debt will help you set aside enough to initiate your investment strategy and put you on the road to investing success.
It is challenging to switch from being a spender to a saver, since you’re bombarded with advertisements and inducements to purchase daily. But the greater reward may come when you start seeing your assets grow, which could give you the ability to make even more satisfying buying choices down the road.
2. Read and Learn
There’s a wealth of information available regarding investing success at public libraries, bookstores and online. Warren Buffet reports that he reads voluminously every day. He studied investing as a young man and exercises a healthy curiosity still. Take classes online or in person to learn about the markets and the sectors in which you are interested. When you pick something that you enjoy, you’re more apt to retain what you learn and apply it to your investment decisions.
3. Buy Performance, Not Image
All that glitters is not necessarily gold when choosing a financial advisor or broker. Instead of focusing on the outward appearances, ask to review their portfolios and their track records with their clients. The same is true with many kinds of investment. Dig deep into their services before committing to an investment regardless of whoever is offering it. Ask about their research and the analytical tools they use, along with their commission structure and fees.
Identify several areas where you want to put your money and how much and fast you need to see returns. The stock market isn’t the place to expect short term gains, but is the place to expect your investments to increase over time. Bonds don’t realize the gains that the stock market does, but it will provide steady earnings over time.
Owning real estate property as an investment will give you a cash flow from rental income as it grows in value. With few exceptions, real estate has appreciated over time, and while you receive a monthly income, you’re also growing your net worth. Property management companies assume the everyday-work related to holding real estate investments, which range from property searches to routine maintenance.
5. Exercise Patience and Discipline
Nearly everything you put your money into will have an uneven growth cycle. Instead of expecting it to increase in value on a linear basis, expect ups and downs. Cultivating patience and the discipline to stick with it, with the exception of extreme circumstances, will help you ride it out.
If you’d prefer to avoid instability, consider investing in index funds, where you spread your money evenly across the stock market. It will help you avoid the seesaw effect of owning individual stocks whose values move up and down based on indigenous and exogenous forces.
Exercising the actions that help you approach investing with a structure based on information and discipline pave the road to success. The combination of your efforts, the quality of research you use and the professionals you choose will put you on the path to more certain and greater gains.
Talk to one of our investment specialists to learn how JWB can help you earn passive income through long term real estate investing.