There seems to be a lot in common with investors in the DG community and successful investors in general. I don't think it's necessarily a particular investment strategy that makes someone successful as much as it has to do with certain traits that a person possesses.
Discipline
A good investor is a disciplined investor. There can be so many distractions and temptations each month for spending your money on things you don't need. From wanting to buy a new car to going to Starbucks every day for coffee. Perhaps your plan is to save at least 50% of your income each month. Creating and sticking to your plan each and every month will help you get to financial independence that much faster.
Persistence
I'm sure you've heard the phrase, "The squeaky wheel gets the grease." If there is something that you want then you have a lot higher chance of obtaining it if you are persistent. It could be a girl you want to date or a financial goal you are trying to meet. Whether you have $100's or $1000's of fresh capital each month to invest, I believe it's important to invest on a regular basis. As a dividend growth investor you are primarily concerned with a growing stream of income whether the market is up or down. Contributing in regular intervals also helps dollar cost average over a long period of time.
Goal-oriented
I don't think it's as important that you hit your goals every time as actually setting them and doing your best to meet them. Having a goal gives you something to aim for. You won't hit the bullseye each time but as long as you keep throwing darts (making efforts) then you will eventually get there.
Intelligence
As an Eagle Scout, there is part of the scout oath I learned as a kid that says " On my honor, I will do my best .... To keep myself physical strong, mentally awake and morally straight. I am talking about the "mentally awake" aspect of investing. You don't need a Master's in Finance to learn about investing. I'm talking about a hunger for learning and eagerness to keep yourself knowledgeable before making purchases. There are so many good books and articles that are available, many for free, that there is no excuse for not doing your own due diligence.
Patience
A good investor doesn't chase stock prices and doesn't sell his positions just because of a big market correction. If fundamentals haven't changed, A good investor uses a market correction to lower his cost basis. Warren Buffet said "Be fearful when others are greedy and greedy when others are fearful." This is a great piece of advice. A great company isn't worth buying at just any price. If you are patient and wait for market pullbacks, which are inevitable, then you will find great companies trading at fair prices.
What do you think? What traits do you believe make a good investor?
That's a great list of traits. I think the most important ones for those seeking early FI is the discipline and persistence. When aiming to call it quits much earlier than 65 you don't have time on your side so it's more about staying focused and continually adding new capital.
ReplyDeleteThanks PIP. I agree with you about staying focused. Sometimes it's hard to do but I just keep looking at the bigger picture of collecting more dividends each year.
DeleteThere's a lot that goes into being a good investor. One of the biggest psychological pitfalls is that people seem to think that being a good investor means that you're somehow able to outsmart the markets and pull in crazy amounts of money.
ReplyDeleteSomeone who made a bundle on Yahoo! is somehow a genius investor, not a lucky guy who took a huge risk that he may or may not have really understood.
Your list much more accurately describes a good investor. Someone who makes plans, executes those plans and focuses on the fundamentals.
My FIJ,
DeleteI agree that many investors participate in pure speculation. While they may win big sometimes they will usually have a lot more losers. I think I'd rather have slow and steady gains from buying blue-chip companies. This also helps me sleep well at night.
Take care!
This is indeed a good post~ In my opinion, good investors find ways to increase their investment capital by reducing their 'bills'. It could be something simple like reducing energy consumption or complex like rental properties to reduce tax liabilities.
ReplyDeleteGood investors also talk about investments and actually invest!
Hi Investing Early,
DeleteThanks, I'm glad that you liked this list! I agree that it's not about how much you make but how much you can save and invest.
Thanks for stopping by!
AAI, Here is an interesting article closely related to your post. Thought it might interest you and your readers.
ReplyDeletehttp://www.theglobeandmail.com/globe-investor/investment-ideas/the-five-traits-of-highly-successful-value-investors/article7926889/
Hi ADY,
DeleteI scored 5/5 for being a value investor. Thanks for pointing out the article and for stopping by.
I'd also add self belief and confidence. Without this, you may start questioning whether you have the right strategy with any adverse fluctuations in price and look to chop and change strategy.
ReplyDeleteThanks for adding that Integrator. I do agree that self belief and confidence are also important traits as an investor. I'm sure they came in handy during the 2009 downturn.
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