What the experts tell us about how to be a successful investor

Whether you plan to invest for retirement, want to build up a legacy or a nest-egg to pay for a dream property, education or make the world a better place, it will be worth learning the finer skills of becoming a better investor.

And while the investment-game at times seems hopelessly complicated, expert say that a good investor is more about being personal strengths than about intricate models.

Start with the end in mind

Experts from Investopedia advise to set a goal and tailor your investment plan accordingly.

Knowledge is power

Investopedia further advises reading and learning as much as possible to make sure you understand how it works - and then define what works for you. They also highlight the importance of being willing to learn, learning from your mistakes and have patience with yourself.

Know yourself

You are in the best position to identify potential weaknesses that will hinder your investment strategy, Investopedia advises, and also to tailor your strategy that you will be in the best possible place to manage this.

They explain that a useful behavioural model to assist investors was developed by fund managers Tom Bailard, Larry Biehl and Ron Kaiser. This model classifies people according to characteristics as individualist, adventurer, celebrity, guardian and straight arrow. They argue that it is easier to tailor your investment stragey and remain disciplined and systematic in the way you manage your finances if you know your “investment type.”

Forbes personal finance contributor David Rae adds that it would be prudent to check against becoming arrogant when you had a good run. “Luck and skill are not the same thing.”

Be careful

Investopedia warns that not everybody offering investment products or advice will have your best interest at heart. They also warn against self-sabotage by seeking short-term profits through high-risk, high-return investments or following the latest investment craze.

While there might be varying strategies most fall in one of three categories, Investopedia explains. Either have a diversified portfolio, or “put all of your eggs in one basket, but watch your basket carefully.” They also describe a third strategy by combining the two strategies.

Revered investment figures like George Soros, are known for extreme high-risk investment strategies that involve betting big and winning big.

If you can't afford to take the loss, you can't afford to bet like Soros. If you have a look at what is George Soros’ net worth you will understand that this type of investment strategy is not for the faint of heart.

It is a long game

While it might not be the most exciting thing you have ever done, a moderate and long-term investment plan will likely be a wise choice, according to Investopedia. They add that a sudden decline in the market can cause many investor mistakes – so it will be best to start off accepting that the stock market is volatile and tailor your strategy for long-term consistency.

Rae, warns that market fluctuations is part of all investment strategies. If it gets too much for you, he writes, move your funds to a portfolio with more moderated risk profiles but don’t ditch the market all together.

“Markets reward patience more than any other skill,” he writes.

“Your portfolio doesn’t care if you look at it every day. I have another client who checks his portfolio on his iPhone multiple times each day. This is a waste of time. The only real benefit (if you can call it that) is the occasional spike in your blood pressure, which may reduce your life expectancy and result in less money needed to fund your long-term retirement plan. The market going up and down is a normal thing and should be expected,” he added.

Vitaliy Katsenelson, writing for Seeking Alpha, also warns against being dominated by fear when you are investing. He argues that investors are either fearing that they will miss out on good times or fear that they will lose when markets are volatile. “These two fears have a zero-sum relationship with rational decisions,” he writes.

He advises that maximise rationality in your investment portfolio it is better not to constantly watch its every move.

Automate

Rae adds that investor behaviour is likely the biggest key to success. “Keep it simple and stick with a long-term investment plan. Resist the idiocy of the masses, and buy low, sell high. Put away some money every month, or from every pay check and watch your account balances grow over time. Put it on autopilot and forget it,” he adds.

Author of the best-selling book Everyday Millionaires, Chris Hogan writes in his blog on investing that “automation” can be used in your favour by having money regularly deducted from your pay-check and put away in an investment.

“Leave your investments alone, especially when the market slumps,” Hogan writes.

Adapt your strategy to your life

Rae adds that good investors alter their portfolio when their lives change for instance if you get married, start a family or moves into the home stretch for retirement. He warns however this doesn’t mean that you should tailor your investment strategy based on a news story or “hot stock tip you heard at a cocktail party.”