Successful investing: 3 simple steps you can follow to achieve investment success

Investing is hard, isn’t it?

You must learn about a complicated financial system, choose from various types of investments, and weigh many other factors before you can even invest your first pound. But investing doesn’t have to be so hard that it feels impossible. The truth is that there are three simple things you can do every day to increase your chance of financial success:

  1. Consistency

‘The investor’s chief problem — even his worst enemy — is likely to be himself.’”   (Benjamin Graham).

It’s easy to get distracted and think that investing is a quick-fix solution—you put in your money and then reap all the rewards. However, as with any long-term endeavour, investing takes time and consistency. Investing is not an event but a process. You can’t expect overnight success; it takes years for your portfolio to pan out fully. You may not be willing to stick with it day after day (and possibly year after year). In that case, your portfolio is unlikely to be profitable enough for you to accomplish your long-term financial goals.

Consistent investing means regularly contributing no matter what’s happening in stock markets or what anyone says about whether now is a good time. When there’s big news about something happening somewhere in the world economy, don’t panic: Just keep calm. Never try to time the market by selling everything out at once because you think there will be nothing left worth buying in six months (or vice versa). If we stay focused on consistently contributing, rather than panicking, this is a fantastic way to help our investments grow.

  1. Patience

Patience is the most important skill to be successful with your investments. Patience is a virtue, patience is a muscle and patience is a choice. If you don’t have any of these virtues, then it’s time to start building them!

Patience can help you make better financial decisions by helping you avoid impulsive decisions. It also helps keep you from making emotional mistakes that can lead to poor investment decisions, like selling out of fear, or buying into the hype because everyone else likes something right now and that makes it valuable (cryptocurrencies being a prime example in recent years). Patience keeps us grounded so we don’t lose sight of our goals.

As far as investing goes; patience is your friend. Over time, a well-diversified investment portfolio should benefit from compound interest. Albert Einstein once described compound interest as the eighth wonder of the world. The power of compound interest is unquestionable, but it takes time. It refers to making interest on top of the original capital and interest, year after year. Therefore, in the early years, this won’t be significant. But given time, compound interest will be hugely beneficial.

This article from Forbes, explains compound interest in more detail.

  1. Simplicity

Investing sounds complex. Many investment professionals rely on this fact to make a living. However, investing can be very simple. A low-cost, global index fund can suit most people, especially when starting out. This type of fund is available on all major retail investing platforms. A bit of Google research will reveal the most common.

Fund managers do all the research and day-to-day investing for you – there is no need to analyse company accounts or decide on which sector or country will perform in the next 10 years.

Setting up a direct debit each month can tick two boxes – consistent and simple.

While the stock market may seem daunting at first, we hope that after reading this article you have a better understanding of the process and can move with confidence toward your financial goals. Remember, there is a whole world of investment ‘professionals’ (some would suggest society too) relying on you not understanding investments. Following the 3 simple steps above will help you move closer to your financial goals.

Read more about getting your finances in order here

See how Engage Wealth Management can help

Engage Wealth Management are independent financial advisers based in Hove, East Sussex. Get in touch today on 01273 076587 or email [email protected]

About the author
Picture of Oliver McDonald
Oliver McDonald
Oliver is the managing director and independent financial adviser at Engage Wealth Management.
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