How to become a better investor?

Becoming an investor is easy, but becoming a good investor is not. In this article we look at how you can start investing in a few steps. The tips in this article will help you avoid the worst mistakes and increase your chances of achieving good results!

How can you become an investor yourself?

You can become an investor yourself by opening an account with a broker. A broker is a company that makes it possible for investors to trade shares and other investment products themselves. You can choose to actively speculate on the markets, or you can invest for the long term by buying stocks and index funds.

How can you invest?

You can also choose to buy shares and other investments for the long term. In this way, you build up a larger capital over a longer period. At eToro, you can invest in stocks and shares without paying any commissions. At this party, you pay no commissions, so you can achieve better results. Use the button below to open an account at eToro:

How can you invest actively yourself?

A great place to actively speculate using CFDs is Plus500. Do you want to try the possibilities of active trading at Plus500, completely free & risk-free? Simply use the button below to open an account:

How can you become a better investor?

You now know at which parties you can best become an investor yourself. When you start investing, you want to achieve good results. In this part of the article we will discuss how you can become a better investor.

Choose investments that suit you

There are many investment methods and not all of them are equally suitable for every type of investor. If you want to become a successful investor, it is therefore important to choose investment products that suit you well.

An important concept here is the so-called risk appetite. If you are young and have a lot of time, you can choose to invest in risky stocks. Risky stocks perform well in the long term, but they are also very volatile. If you do not have enough time, you can lose a lot of money with this type of investment.

When you are older, you might not have this time, so you can better opt for more stable investment products. It is therefore essential to first determine which investment product suits you best.

Learn to lose

An important characteristic of the successful investor is that he or she dares to lose. By regularly taking losses, you ensure that your stake does not evaporate through one wrong decision. On the other hand, it is important to leave your profits open as long as possible so that you achieve the best possible result.

You do this by deciding in advance where you will take profits and where you will take losses. For example, you can determine that you will use the lowest or the highest point on a day initially as the point to take a loss. Subsequently, you can only move this moment, which is also called a stop loss, in the favourable direction at which your maximum loss becomes less: in this way you ensure that you maximize your profit without exponentially increasing your risks.

Do not panic

The biggest mistake you can make as an investor is to panic. The stock market is unstable and stock prices will regularly fall sharply.

Of course, it is smart to sell your shares when there is a good reason for doing so. When the company commits fraud, for example, or when a competitor is a better alternative. However, a stock market crash is not a good reason: after a stock market crash, you often see a recovery. It would be a waste to sell all your shares at the time when the price is falling.

Remember that before you sell the shares, there is only a paper loss. A paper loss is an unrealized loss: when the stock market recovers, this loss can even disappear completely. A good tip is therefore not to constantly look at your screen, especially during a crash: don’t focus on the red numbers, focus on your future plan.

Invest in things you understand

When you want to become a better investor, it is important to invest only in investment products that you understand. Too many people invest in things they cannot even explain properly. Think about complex financial products or shares of companies of which they do not even know what they do.

The famous investor Warren Buffett successfully follows this rule: he only invests in companies of which he can explain in a few sentences exactly what they do. With this strategy, he manages to beat the market indices year after year.

Keep it simple

Wall Street films often give us the idea that investing must be very complicated. In practice, a simple strategy is often a better strategy. Especially as a beginner investor, it is not necessary to invest with dozens of indicators in a selection of the more than 20,000 shares listed on the American stock exchange.

Instead, start by keeping an eye on a small basket of shares. In this way, you will keep abreast of the latest developments in the stock market and be able to achieve the best results.

Accept that timing may be impossible

There is much debate about whether market timing is possible. In any case, it is clear that timing the market is very complicated and that even the best fund managers cannot do it. It is therefore more important to apply a good strategy than to time the market well.

If you invest for the long term, you can use dollar cost averaging: you periodically buy a certain quantity of the share, which means that you buy at both the lower and the higher prices. You never know for sure whether the market is at a low point or a high point.

When you trade actively, timing is also less important than you might think. Sure, by timing well, you can make a nice return. But it is more important to handle your risks well. For instance, if you make sure that profitable investments yield more than loss-making investments cost, you will achieve better investment results.

You are allowed to make mistakes

Even good investors make mistakes. However, to become a better investor, you must learn from your mistakes. You do this by regularly analysing your performance. By subsequently correcting systematic errors in your way of thinking, you can improve your investment results. Making mistakes is 100% forgivable, but ignoring them is not.

Become super-rich with investing

Many people, especially young people, decide to invest because they have heard that it is a good way to become rich. Such expectations are magnified by the stories you read online of people who have never invested and have become millionaires with just a few pounds.

At the same time, you see that many people stop investing because it turns out not to be so simple after all. Becoming an investor is easy, but consistently profitable investing is not. There is a lot of jargon in the stock market world and if you want good results, it is important to have realistic expectations.

In any case, it is important to remember that investing is not a get-rich-quick scheme. It is a marathon, not a sprint. There are no guarantees and it is important to invest only with money you can afford to lose. By starting with correct expectations, you can become a better investor.

Becoming an investor is simple: now invest successfully

Many people ask me why so few people become investors when it is relatively simple. This is because becoming an investor is simple, but because of the wrong mindset it is difficult for many people to become successful. From my experience and the experience of many other investors, it has regularly emerged that the people who succeed do not do so because of their great strategy, but because of their way of thinking and acting.

If you give ten people a strong system, all those ten people will achieve a different result. This is because we all have different values, emotions and character traits. Once you understand what your strengths and weaknesses are as an investor, you can achieve better results.

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Auteur

Over Alex Mostert

When I was 16, I secretly bought my first stock. Since that ‘proud moment’ I have been managing trading.info for over 10 years. It is my goal to educate people about financial freedom. After my studies business administration and psychology, I decided to put all my time in developing this website. Since I love to travel, I work from all over the world. Click here to read more about trading.info! Don’t hesitate to leave a comment under this article.