How to Become A Good Investor?
Becoming a good investor is lucrative and profitable but it also requires a lot of knowledge, and hard work. Before investing, you should be aware of your investment objectives, time horizon and risk tolerance level. Additionally you should be aware of finance related terminologies like credit balance of profit and loss account and how to use these to your advantage. See more. The right approach to investing depends on your financial situation, including your age, income, savings and investment goals.
So what are the characteristics of a good investor? The answer to this lies in the ability to make prudent investments and get the maximum return on that investment or wealth creation with minimum risk. Here are some key characteristics:
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A major reason for losses in stock markets is impatience by investors. Investments need time to grow and appreciate. It is important not to redeem them just when they begin to show signs of growth or appreciation in value. A good investor is more concerned about their long-term returns than their short-term profits. They keep calm in all situations even if they are losing more than 50% of the money they invested. If a good investor loses some money he will take it in his stride and try to learn from his mistakes. He knows that there are lots of risks involved in investing and if he wants to earn huge returns, he needs to face all these risks.
This is another important characteristic of a successful investor. Investing requires self-discipline and the ability to follow your strategy even during times of market uncertainty or downturns. If you have set an asset allocation strategy for yourself, you need to stick with it no matter how the markets are behaving at the
3. Good Decision-Making Ability
A good investor has the right decision-making ability. They listen to the world but do what is right. They know the time and keep an eye on current scenarios in the market and they keep updating their knowledge about market activities and growth.
A good investor pays close attention to the market trends, company performances, competition and other business activities of the company. He/she looks at all the possible outcomes and chooses the most appropriate investment opportunities accordingly. This also involves keeping track of investments and always having an exit plan. They have an idea of when they want to leave the business and make preparations accordingly.
A good investor knows his strengths but also his weaknesses. He knows when it is best to rely on others for help or advice because he respects their abilities and judgment. He knows what his strengths are and where his weaknesses lie. He has reasonable expectations for each company that he invests in so that he can determine if a particular investment opportunity is worth pursuing or not. A good investor doesn’t invest in every single opportunity that comes along because this will only lead to him getting caught up with investments that he is not equipped to handle no matter how promising they may appear to be.
Clearly being an investor involves more than just knowing about terms like delivery challan or how to read stocks. Hence as an investor you should use the principles mentioned above and be sure that repetition will make you good at the art of investing.