Does it seem that the secret to successful investing revolves around watching the market, analyzing shares, looking for trends and monitoring historical data? Is it research, research, research? Is it about market timing, super intelligence, or having more money? No, it’s not about any of those things. It’s actually very simple and anyone can be a successful investor. The secret is time and personality.
- Time: The key to investing in the stock market is having time on your side by having a time horizon of more than 5 years. Successful investing happens over the long haul, and investing in the stock market is not…I repeat, it’s not…a quick fix. I started investing at age 25 and I have steadilyy increased how much I invest since that time. The market has had it’s ups and downs and over the long haul there have been more ups than downs.
- Personality: Having a calm and steady personality is also a key component to successfully investing in the stock market. As the market plays out in the cycles that are inevitable, it takes a strong personality to ride out the peaks and troughs.
Again, it’s not about getting rich quick, but it’s staying in the game and rationally evaluating the market. It’s not reacting because “everyone else” is reacting and it’s not reacting just because the market does something out of the ordinary. Our reactions tend to be driven by emotion and that is what gets investors in trouble.
Our inclination is to sell shares when the market has dropped to cut our losses, but if we are in the investment game for the long term we need to ride out the storms. When the market has dropped is actually a good time to pick up more shares because they are “on sale”.
To set up an automatic investment scheme with regular purchases is best because it evens the market out; some shares will be bought when the market is low and some shares will be bought when the market is high. This takes out the emotions and trying to time the market because it is regular and automatic. Most importantly it’s a steady course over a long period which is best because slow and steady wins the race.
A well diversified portfolio can grow steadily over time and withstanding the ups and downs of market swings. A diversified portfolio doesn’t need to be looked at daily or weekly or even monthly, and therefore frees up your time to do the things you enjoy most. It will do what it’s supposed to do over the long haul and give you financial freedom in due course.
Get in the market for the long term and relax and sleep better with a sound long-term plan. Done right, your retirement can be brought forward just like mine. Retiring at 55 sounds much better than 67!
Julie Feuerborn, CFP© is Julie The Money Coach which is the business she founded to empower others to take control of their financial destiny.
Clarifying the financial world for her clients is her passion. She eliminates the fear around making financial decisions by educating and mentoring (and sometimes hand holding) which creates financial confidence. She loves when a client understands the role money plays in her life because it creates peace of mind and because it adds a whole new level of possibilities for her clients to live the life they deserve.
Julie has followed her dream and since 1994 Julie has divided her time between Colorado and the UK with her husband and the youngest of their four children. She currently lives in rural England where she enjoys going for long walks and watching the sheep in the fields. Her other passions include international travel, reading, yoga, meditation, hiking and camping.
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