Becoming a better investor is a surerfire way to accelerate your goal of financial freedom.
Investing is a journey that requires persistence and growth.
Can we get “lucky” with our investments? And better yet, how can we repeat our “luck”?
While luck certainly plays a role in investment outcomes, we can also strategize in order to position ourselves for better “luck” in investing.
This article was written by a Financial Horse Contributor.
Create More Opportunities
When you fail, try, try and try again.
In order to hone your investing strategy, you need to try out different ways to see what suits your competencies + risk appetite.
Try different investment strategies in small amounts before scaling up successful ones.
This increases your chances of finding winning approaches while limiting potential losses.
Stay Alert
In order to create more “luck” you have to expand your potential opportunities – and you can do so by staying alert.
Read more, network more, and try more.
By expanding your horizons both mentally and in real life, you develop increased sensitivity to investment opportunities.
Expand your knowledge base
The best way to get lucky in your investment is to expand your knowledge base.
The more you learn, the more you earn.
Start by making sure you understand core concept and basic financial principles.
Check out our guide to investing.
Level up critical thinking by learning from your mistakes and putting new skills/knowledge to test.
Keep a record of your wins + losses, and what you learnt each time.
This helps you hone your investing strategy so you can replicate your “lucky” breaks more often.
Risk Management
The flip side of getting lucky, is staying lucky.
In order to maintain your “luck”, you also have to be careful about risk management.
Diversify investments across different assets and sectors – and make sure you are analzying your portfolio diversification accurately.
Maintain disciplined position sizing, and only invest money in line with your risk tolerance.
Long-term Perspective
It’s easy to get “lucky” once in investing, but to maintain performance requires a long-term perspective.
You don’t want to be a one trick pony, let’s all aim to be iron man horses.
The tenets of value investing are helpful as guidelines.
Value investing focuses on intrinsic value by examining a company fundamentals.
Evaluate financial metrics like P/E ratio, P/B ratio, and dividend yield.
Analyze financial statements, competitive advantages, and future cash flows.
By focusing on the business fundamentals, you adopt a long-term strategy so that can stay lucky with your investments throughout market cycles.
Emotional Control
Being lucky with your investments means you get a lot of wins and highs.
But in order to keep your investment highs, you need emotional control.
This includes being objective when making investment decisions, especially during market volatility.
Avoid panic selling during market downturns and be patient with your long-term investment journey.
Stay Humble
When you get “lucky” with your investments, it is easy to become prideful about your success.
However, pride comes before a fall.
Acknowledge that both success and failure involve elements of luck.
By staying humble and focusing on consistency, you can avoid overconfidence after winning streaks.
Taking breaks after significant gains (and losses) can also help to maintain perspective.
Don’t be greedy
Being lucky with your investments gives you a high, and may lead you to think you are bulletproof.
It is important to have realistic expectations.
Bull markets can create false confidence in investing abilities, leading investors to chase unsustainable returns.
Pursuing unreasonably high returns often pushes investors to take excessive risks, which can lead to significant losses.
Success in investing requires patience and allowing investments to grow in a disciplined manner.
Discipline and Consistency
Truly successful investing combines both skill and luck.
While you cannot control luck directly, you can open yourself up to more opportunities and capitalize on good fortune when it arrives by building up your investing fundamentals.
Successful investing is more about discipline and consistency than finding “hot” tips or timing market swings.
Regular portfolio review and rebalancing also ensures that your investment strategy aligns with your goals.