Confidence is often an underrated key to success. If you’re confident in your knowledge and abilities (or at least your ability to learn), success is on your doorstep.
But if you aren’t confident in your investing prowess, it’s difficult to believe that you’re making the right decisions. Not to mention, if you lack both confidence and knowledge, it’s harder to get where you want to be financially.
We can’t teach you everything you need to know about investing in one day. But we can give you the tools to help you fake it ’til you make it – and learn a little more along the way.
1. Identify why you want to invest so you can talk about it.
Define your long- and short-term goals first.
Before you put a dime into the markets, you should know why you’re investing. Bear in mind that everyone’s goals will be different, and that’s just fine! You don’t need to align your goals with someone else’s to sound savvy – just know what’s important to you.
Having goals not only gives you a “finish line” but helps you determine:
- How much you need to save
- How long you have to save
- And how much risk you can tolerate
Dividing your goals into long- and short-term plans can also help. For example, saving for a car or vacation would probably count as short-term goals. By contrast, investing for retirement or building a down payment for a house are long-term goals. Knowing when you need the money allows you to better define your time horizon.
Just be sure to identify your risk tolerance before you dive in. Your risk tolerance and goals go hand-in-hand. The longer your time horizon, the more risk your portfolio can typically withstand. Your risk tolerance typically drops for shorter time horizons, especially as you get closer to retirement.
Risk also plays into your potential for gains. Generally, riskier investments boast greater return potential, but there’s no guarantee that you won’t lose your shirt along the way. Conversely, less risky investments aren’t as likely to send your portfolio soaring – but a risk-adjusted approach can still generate substantial results over longer time horizons.
The key to becoming a savvy investor here is finding the right balance between risk and reward that suits your goals. Then, when your friends ask, you can tell them exactly why you’re making such-and-such investment.
2. Understand why investing is a wise move.
Your ROI tells you how much you could gain (or have already). Your ROI, or return on investment, is a financial metric that shows theoretical and actual profits over time. In other words, your ROI is how much you can (or did) gain with your investments.
If you’re new to investing, your ROI may be low or nonexistent. But that’s okay – history provides plenty of examples to show why investing is a wise move.
For instance, take a look at the S&P 500, or Standard & Poor’s 500 Index, which has returned nearly 1,100% since 1957.
But we aren’t done yet. There’s also the Dow Jones Industrial Average, or DJIA, which tracks 30 of the largest “blue chip” stocks. From 1896 until now, the DJIA has returned a whopping 86,283%.
Getting started earlier boosts your chances for success.
One well-known key to success as an investor is starting early and investing consistently. While no investment is ever 100% guaranteed to make you rich, with a well-diversified portfolio and enough time, you’re likely to see some growth.
Getting started early comes with perks beyond more years to contribute to your portfolio. For example, the longer you invest, the more your money can benefit from compound interest. And if the market crashes, you have more time to recover from your losses.
3. Brush up on key investing resources.
Books are a fantastic place to begin.
We’ve already written a piece on five must-read books for investors, so we won’t rehash them in detail here. From the “Holy Grail” of investing to Burton Malkiel’s enlightening take on market predictions and common investing mistakes, there’s plenty there to keep you engaged.
And suffice it to say, these books will help you grow from novice to expert in no time at all! (Okay, it will take some time. Just think of it as an investment in yourself!)
Videos provide their own spin on investing advice.
Not everyone has the time to sit down and read a whole novel. Fortunately, plenty of investment gurus have packaged their advice into palatable videos to help you find success…if you can sort the dung from the diamonds.
Unfortunately, there are too many to build a comprehensive list in one little article. Instead, we’ll kickstart your journey with two simple suggestions.
The first video is a motivational speech given by two of the world’s richest men: Warren Buffett and Bill Gates. Not only do they expound upon the importance of investing, but they share their insights into success – lessons that investors of all stripes can take to heart.
The second is a YouTube Channel run by famed investment advisor, hedge fund manager and best-selling author, Phil Town. This legend of the investment stage parts with his secrets in bite-sized segments that encourage “Warren Buffett-style investing strategies.”
4. Get to know trends and current themes.
Find trustworthy, up-to-date sources for your investing news.
Another secret to success is identifying the trends and themes moving the markets. While short-term trading is often unwise, what is wise is buying quality stocks in a dip and staying ahead of the curve. Fortunately, you don’t have to dig: Simply subscribe to the Q.ai newsletter to receive quality investing advice every week!
Long-term thematic investing trends may also be worth a look. You shouldn’t just focus on short-term trends. Many long-term trends have the potential to turn into cash cows, too. Just imagine if you’d invested in Apple in the ’70s or Amazon in the ’90s!
But cherry-picking individual stocks can be a crapshoot, which is why we often extol the virtues of theme-based ETFs and investing kits. These allow you to invest in particular niches, such as clean energy, robotics, and remote work, to fund change and profit from it, too.
And once again, you don’t have to look far to find quality investments: Q.ai’s Investing Kits have everything you need. From Global Trends to Clean Tech to Short Squeezes, we’ve built fully managed portfolios to help you capitalize on short- and long-term trends.
5. Enlist help to do the hard work.
If you’ve searched the web enough, you’ve probably come across dozens of articles waxing poetic about financial advisors. And for some people, they can make sense. But in the modern age, many have outgrown the need for top-notch, top-dollar advisors thanks to the plethora of quality information online.
Oh, and have we mentioned AI-backed investment services like our very own Q.ai? With features like quality-packed investment Kits, weekly rebalancing, downside protection, and of course, AI factor models, we’ve made it our mission to help everyday retail investors conquer their investing goals.
Together, we’ll bring you the best of the best: You fund your account, and we’ll put your investments to work where our AI sees potential for success. Best of all, there are absolutely no fees!
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