What kind of qualities do you need to be an investor? Do you have to have some special aggressive personality with a carefree attitude of what happens, happens? Do you have to be born in a family that raised you to think along those lines? What if you have lived paycheck to paycheck your entire life? Does that automatically eliminate you from breaking that cycle?
My Background in a Flash
I was married for over 32 years and have 4 children. Most of that time we lived paycheck to paycheck, never having even $1000 in our savings account. Once the big unexpected bills came along, plunk, they went on the credit card. That started an unhealthy path to tens of thousands of credit card debt. It didn’t help when I plunked way overpriced “education courses to make more money” onto the credit cards. It took hiring an attorney to get some of that money back.
But I was tired of living with the stress of never having enough money. Fortunately, both of us had put in money to his 401k and my 403b. (If you are not doing that, start NOW!) After the divorce, I found myself in charge of my Rollover IRA. Long story short, I have taken on investing in the stock market and have found it very profitable (after my huge costly mistake! See How Am I Doing in the Stock Market?)
Although my background is in music education, my trading experience has given me a taste of what I think which type of person should invest.
Characteristics of a Successful Investor
- You want to build your wealth. You are not satisfied with a maximum 2% return on a certificate of deposit at your bank.
- You are willing to take the time to learn about investing so you know if you are getting the best return for your money.
- You are patient. You understand that the market goes up and down and so will your portfolio. If you did your homework in the beginning and found a good portfolio manager, you can rest easy.
Up to this point, if you agree with those 3 points, here are some more things to consider if you personally want to manage your own account.
Characteristics of a Stock Trader
- You are not going to take “hot tips” from others and blindly invest that way. That is the fastest way to lose your money.
- You can follow your own rules without fail!
- You can set up routines and consistently follow them.
- You periodically perform post analyses of your trading to learn from your successes and mistakes.
- You continually seek out more knowledge to become a better trader.
- You can roll with the highs and lows of trading. Let’s face it, you need to be able to sleep at night.
- You understand there is risk with trading, but you have control over the risk if you have sound rules and follow them consistently.
- You like having full control of your money at all times.
I have learned that I enjoy trading 80% of the time. No, those big down days don’t feel good. I wonder what the heck I’m doing. But my account has grown so much under my control that I know I’m doing a lot of things right. I’m also getting better at having a defensive plan should the market take a turn. Let’s be real. It’s when the market takes those deep dives is when you can make the most money when it turns positive. But if you ride the wave down, then you can’t take part in that opportunity. And I don’t know that if my money was handled professionally, would they sell my stocks early enough or at all? I know one company wouldn’t have from the discussion I had with them. See my post My Plunge Into the Stock Market. So I have chosen to have full control over my money, and I take ownership of my successes and mistakes. Does this sound like you?
Until next time,