10 Tips for young investors

“I always knew I was going to be rich. I don’t think I ever doubted it for a minute”– is what Warren Buffet, an epitome of a great investor said once. He always dreamt big, not because he was born with over the top talents or wealth, but because he knew the key to being rich, i.e. investing right. Talk about any successful investor; they not only invest better, but also invest at the right time. So when is the right time to invest? Here’s the thing, if you really want to be a millionaire, why not start now? Investment albeit fetches enough money, it is not really synonymous to making easy bucks; cautious bucks maybe but never easy, and young investors are everything but cautious.

“Investing should be more like watching paint dry or watching grass grow.

If you want excitement, take $800 and go to Vegas.”

-Paul Samuelson

There is a specific variety of callousness in people when they are young. But in investment, there is too much at stake. One bad move can bring all your dreams crashing down, just like a card-house. So the question is, can you be a successful investor at a young age? If yes, then how? We have tried to solve this conundrum in this blog, with just 10 tips, which will make you successful as a young investor.

 

1. Know your goals and set them right on the list

“If you chase two rabbits, you will not catch either one.”

– Russian proverb

Your aim is not chasing rabbits, but catching them. This can be done right if your set your priorities right. When you are young, there is too much on your plate, often things that do not need to be there on your plate. They might go away as you age. But having them in your plate conveniently leads to failure because you have no idea what needs to be done first. No matter how smart you are, if you bite way more than what you can chew, chances are you might not be able to savor any of it. Set your focus right and do not spend even a second’s time over things which are not on “the list” and remember what Scott Caan said- “good things will happen when you set your priorities straight”.

 

2. Spend less than you earn

According to Charles A. Jaffe, “it’s not your salary that makes you rich, it’s your spending habits.” You cannot dream of being a flourishing investor if you keep spending all your wealth on petty things. To be able to succeed as an investor, you need to invest, which only comes from having money, which in turn comes from cutting down on unnecessary expenditure. Now we are not asking you to dwell on the streets so that you can invest big. Remember, the key is avoiding the extravagant expenditures.

 

3. The sooner the more sillier

Of course we expect you to make mistakes sometimes. You might as well fail when you take a chance. What we want you to keep having is the enthusiasm that compelled you to take the long road.

“Success is the ability to go from one failure to another with no loss of enthusiasm.”

– Winston Churchill

When you are young, you can take bigger risks because there is time to make up for the mistakes you commit or get over the failures you witness. So invest young to fail big and to win bigger!

 

4. Diversity is the key

What you need to never forget is that a diverse investment would enhance your chances to success. The reason is because you are going to put at stake lesser amount of money in say three different places. So God forbid, but even if one of these places turn out to be a bad choice and things go south (as they often do), the money you had invested in the remaining two places would at least be safe! In short, you would not go broke if one of your many investments get bombed.

 

5.So is regular monitoring

We are referring to monitoring your portfolio here. You are not allowed to invest your money and just forget about it. As a matter of fact, this is something that you should not do even if you are a millionaire because you never know that you might have lost your only chance to be a multi- millionaire! So make it a point to keep a track of all your investments. In fact, you can decide a day or days in a week and check on the status of your investments.

 

6. Do not forget the significance of discipline

“Your level is determined by your level of discipline and perseverance.”

-Anonymous

If you want to stay in the game, you have to follow the rules if you want to win big, and the foremost rule that you ought to adhere to, is doing what needs to be done. Whims and fancies can be kept aside, because what will make you win is anything but discipline. As David Cameron said- “discipline is remembering what you want” and what you want is to lead in the vast world of investment.

7. Do your home-work of rigorous research

“An investment in knowledge always pays the best interest.”

-Benjamin Franklin

No matter what field you work in, an in-depth research will aid you. It will make you stand out from all those who wish to achieve just what you wish too. It is your knight in the shining armour. It will give you a winning edge. So if you want to never fail, know your investment like no one else.

 

8. It is the duration that counts more than the money

Sometimes, you need to consider running longer instead of faster. One of the most important hacks that makes a successful investor is to invest maybe lesser sum of money for longer time, rather than a huge sum of money for maybe two or three years. This hack not only helps you in playing safe but gives your profit a substantial amount of hike. So the next time you plan to invest, focus more up on time rather than the amount of investment.

 

9. Take “calculated risks”, rather than just “risks”

“Risk comes from not knowing what you are doing”

-Warren Buffet

If however, you know what you are doing, but you are willing to take a chance and lose it all if need be, you are taking what is called a calculated risk. What you need to learn is taking these kinds of “calculated risks” rather than “risks”. With risk, your chances to fail increase while with calculated risks, your chances to succeed, increase.

 

10. Invest with long term horizon

Sometimes, some investment strategies might allure you with the schemes that they offer. This does not mean that they would benefit you in the long run as well. What young people tend to overlook is the fact that all that glitters is not gold. Instead of schemes which offer short- term benefits, look for investment options which are beneficial in long run. Instant gratification is not always good.

Remember to “have long term goals always, so that you can be kept from getting frustrated about short term failures.”

-Chares C. Noble.