5 Key Steps to a Successful Investment Journey + Bonus
Investing in the stock market is the simplest way to get rich. You can become a millionaire simply by putting your money in the market.
Warren Buffett built a fortune of more than $100 billion simply by long-term investing. He didn’t invent anything new — he just bought businesses.
On the other hand, most people make some fundamental mistakes that prevent them from growing their savings over time.
Every investor goes through a different investment journey, and I recommend following these guidelines if you want to have a successful one:
Determine your investing time horizon:
Decide when you wish to spend your savings. The longer you want to invest, the more stocks you should hold.
A rule of thumb is that for every additional year you wish to invest — hold another 10% stocks. For example, if you intend to buy a house in 2 years, than hold 20% stocks in the portfolio.
Choose an investing strategy and stick to it:
There are many ways to manage your savings. Here are some popular ones:
- Income investing- own dividend-paying stocks or bonds and get a steady income.
- Growth investing- buy stocks of companies that are anticipated to grow rapidly.
- Value investing- get stocks that are worth less than their intrinsic value.
- Buy the market- hold ETFs or index funds. This approach is the most straightforward and suitable for those who don’t seek to beat the market.
- Blended strategy- buy ETFs or index funds and some portion of individual names.
It is important not to change the investment approach too often.
Build a diversified stock portfolio:
Your portfolio should have at least 10–12 different stocks.
You can do your own research and find the best stocks. It is a challenging task but very rewarding.
Another approach is to follow the smart money — buy stocks that the world’s greatest investors are buying. You can find their holdings here: STOCKTIKA.COM | Official website
If you don’t have the time or will to pick stocks yourself, you can buy and hold index-tracking funds — it is simple and easy. Some recommended funds are SPDR S&P 500 ETF Trust (SPY) and Invesco QQQ Trust Series 1 (QQQ).
Minimize account fees and other costs:
Account expenses will bite your savings and add up to significant amounts. Open an account with a commission-Free brokerage (or nearly free).
Most countries have various retirement saving plans with tax benefits. The popular retirement savings vehicles in the United States are Traditional 401(k), Roth 401(k), Traditional IRA, and Roth IRA.
Don’t check your portfolio every day.
Timing the market usually doesn’t work.
Be in It for the Long Term.
Start investing as soon as possible, and add more money whenever you can.