While many self-directed investors understand that managing their own money can involve a great deal of responsibility and work, many do not realize the important skills they need to commit to mastering in order to succeed. Certain investors want to “dabble” or learn to trade with what they often characterize as “fun money” however losing money or hurting your portfolio’s performance is no laughing matter.
Regardless of whether you are a novice or an expert, everyone who manages a portfolio faces the same challenge of maximizing the returns on their capital while effectively managing risk. While the finer points are certainly different between multibillion dollar fund managers and everyday self-directed investors, there are three core characteristics that all successful investors share.
Diligence
Great investors and traders are always willing learners. While one of the key differences between experienced and novice investors is the length of time it takes to do sound research and analysis, all successful investors still have to do their homework.
Investing and trading involves doing a lot of research and so becoming both fast and accurate in making assessments will make doing that homework much more manageable. Getting to that point, however, takes time.
The process of scanning through possible opportunities, monitoring your portfolio’s performance and paying attention to the markets are just some of the tasks successful investors are willing to make part of their routine because ultimately the payoff justifies the investment.