Here are 5 ways to help you become a successful investor:
1. Educate Yourself
Don't worry this doesn't mean going to university to get a MBA, or a degree in finance, or accounting. I am talking about practical education that you can implement right away on how to invest for success. Education is the first and most important element, because without you will not be able to implement the rest of the items in this list. A lit bit of effort in education will reap huge benefits for you for the rest of your life.
2. Forget Mutual Funds
Stop wasting money on mutual funds. I've already written about the negative aspects of investing in mutual funds here:
3. Buy Quality Stocks
Buy stocks in companies that are financially healthy, have low debt, and pay dividends. Look for companies with a very long (+10 years) track record of increasing earnings, and increasing dividends. Look for companies that will still be around 20-30 years from now.
4. Buy Low
Buy stocks when they are priced low. The stock market is the only place in the world where people buy more when the stock prices are rising and sell when stock prices are declining, which is exactly the wrong time to buy and sell, this guarantees failure. You want to buy low and sell high, this is going to maximize your profit. Forget the advice of misguided friends, sales advisers, and the advertising hungry media, get educated yourself on how and when to buy stocks.
5. Keep Emotions Out of Investing
People get emotional when it comes to money, especially when it comes to their own money. Avoid getting fearful and selling too low, or getting greedy and buying too high. Remain patient, stock prices change every day, and every hour. The dividend value investing strategy works, but it does take time. You have to have the patience to ride out the short-term price fluctuations. Patience and confident investors are rewarded.
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