Beginner’s guide to becoming a successful investor

Investing your money in the markets isn’t easy, but can be a great way to reach your financial goals, and who knows… maybe your financial freedom one day! To become successful over time when investing in the financial markets, you need to consider your investments like a business, and plan carefully. Here are a few steps to consider if you want to become a profitable investor over time.

#1 Take into consideration your personality

Determining your investor profile is the first step to investing, as it will help you decide what investment style and strategy to adopt. Think about your personality, how long you’re able to focus on a single task, the time you can dedicate to managing your investments, your starting capital, your risk-aversion, as well as your time horizon.

#2 Decide which investment style and strategy to follow

There are a range of different investment styles and strategies to choose from. If you’re not available to actively monitor the markets and prefer taking advantage of long term trends, you could choose a “buy and hold” strategy, for example. Pick a strategy that fits your investor profile and financial goals. Then, you can work on your trading plan to fine tune your investment setups to enter and exit the markets, as well as your risk management rules.

#3 Pick the right financial products and markets to invest in

If you prefer to invest in the stock market and bet on undervalued companies in key industries with significant potential growth, you might want to consider penny stocks. Read this penny stocks trading explained guide if you want to learn more about penny stocks and how to include them in your strategy. You might otherwise be more comfortable investing in large caps or funds via an ETF, or perhaps you might better understand the commodity market. The most important thing is to know the type of markets you want to invest in. You should also choose the kind of markets and financial products to use to reach your goals – they should always fit your strategy.

#4 Choose the right broker

Selecting the right platform to implement your investment strategy is an important step you shouldn’t underestimate – especially today with so many different online brokers available. So, take your time to compare the offers and do your research to pick the right broker for your trading needs. Compare fees, security features, trading platforms and tools available, as well as markets and products offered before picking your investment platform.

#5 Diversify your investment portfolio

Finally, always remember to not “put all your eggs in the one basket” – don’t put all your effort and resources into a single investment (or investment class). So, diversify your portfolio! Consider investing in different asset classes, countries, and currencies. If you invest mostly in stocks, think about the currency market and business cycle to focus on upcoming, promising companies in accordance with major investment themes. You should also invest in different companies that aren’t positively correlated, so then your portfolio is better protected. Ideally you should consider different activity sectors.