Investing Rules: What are the Skills that Every Investor Should Possess?

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Hard work is not enough to build your wealth. You also need to be capable of handling your finances, have a creative idea for a product or service that people will want, and are willing to invest the money you have saved up for the chance to grow it.

People invest their money in the stock market to earn more. Although the price of individual stocks rises and falls every day, if you invest in promising and stable companies, over time, it will rise in value. You can make a profit by investing in the right organization at the right moment.

A person can be very rich by entering the stock market. For example, if you invested $10,000 on a block of shares in Microsoft in 1986 (the year the company had its initial public offering), by now, your investment would be worth $23.4 million. It will not be easy to build wealth through stocks, but it is quicker than working hard for decades, and you can gain more — as long as you make the right decisions.

Be Curious

When it comes to the stock market, trusting your gut instinct will not get you anywhere.

In most things in life, success comes not by making random choices but by making educated decisions based on research, observation, and experiences. Starting as an investor in the stock market requires intensive studying. An investor must first know not just the basics but information about individual companies across different industries.

business men

Warren Buffet, one of the most successful investors of all time, says those who want to grow their wealth and enter the stock market need to read up. In a letter to investors in his company Berkshire Hathaway, Buffet said that it is a better decision to buy from a “wonderful company at a fair price” rather than a “fair company at a wonderful price.”

Buffet also said that investors should look at the quality of the company. This is where familiarity in industry and business. Oil and gas investment companies are highly favorable, but it still is crucial to vet all options.

Going into it blindly might only lead to massive losses.

Be Patient

It took Microsoft 16 years to turn $10,000 to $23.4 million in the example above. In that time, the company went through several ups and downs in which the price of shares also fluctuated.

Selling on the first sign of trouble can save you from losing money. However, it might also prevent you from gaining more. Sometimes, holding out even when the situation is bad is the right choice. If you believe that the company can pull through and succeed, why not give them the chance to turn their misfortune into success and your few dollars to more.

If you are in it for the long-term, chances are, your gains will be much larger, too. If you have done your research, then you will be able to make decisions that will get you the best gains.

Be Courageous

The stock market will not always be in your favor. You will experience losses, some of which will be very painful. However, do not be easily discouraged. Pulling out immediately will only lead to regrets. You will waste your time and money entering the stock market then backing out before you even start really gaining.

As Dennis Gartman, a renowned and accomplished trader, said, even if your predictions and decisions are only correct 30 percent of the time, you can still double your investments and not feel the losses at all.

stock market

Remember that investors that are successful are not worried about losing money. It is part of the game. As long as you are winning more, you can recoup the investments you have lost without a problem.

More importantly, do not sell as soon as you start earning. Hold out longer and let the company grow bigger, increase the cost of shares and give you a better return.

Be Forward-Thinking

The present is important when it comes to the stock market. However, the future is important, too, and events still yet to happen may influence your investments.

Start thinking of the long-term gains. An investor who is always thinking forward can invest in a promising startup that will grow into an empire. Getting in early means the cost of the shares are still very low but, later on, it will rise and turn your small investment into a fortune.

Participating in the stock market is not easy. There is a lot of work involved, beginning with extensive research and then regularly observing the market.

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