If you want to make a lot of money making smart investments, then you will want to read the habits you need develop in order to become a self-taught financial expert on the stock market.
Investing is the best-kept secret in all of finance. Many amateurs think that it is too complicated for them to dabble in, so they leave the job of managing their finances to other people.
The personal costs of allowing another person to look after your investments for you can be quite high. Mutual funds and pension managers, for instance, will regularly ask for 2 percent per year (regardless of whether they are making you money.) And hedge funds will ask for even more.
To prevent this, it’s worth delving into financial concepts and ensuring that you understand them.
But, as somebody on the outside, all of this can seem hopelessly complicated.
As you might know, I’m a bestselling author, award winning designer and happiness researcher. I wrote a book called Happy Habits.
In my research, I learned a lot about how to make sure you develop positive habits which lead to your best life – by embracing specific principles of “habit formation.”
In this article I will be sharing some of the main habits you need to develop in order to become a self-taught financial expert on the stock market.
In this post (below )we take a look at how you can become a self-taught financial guru on the stock market.
When you begin your journey of financial discovery, it can feel like you’re entering into an alien world. Terms such as “securities” and “amortized” are foreign.
The trick here is to start slow and just learn one financial concept at a time, building up from there. Don’t approach the topic in a haphazard manner – that’s just confusing. Instead, start with an undergraduate textbook on investing which explains everything in a logical order.
There are many forums online where you can learn more about the nuances of investing. Bogleheads, for instance, are famous for sharing their knowledge with amateur investors, showing them the ropes (and the risks that they face).
Once you find your bearings, the next step is to go on a financial course. These can be illuminating because they provide practical demonstrations of the kind of knowledge you’ll need to be successful in the markets.
Many amateur investors, for instance, are surprised to find out that picking winners in the stock market is virtually impossible. (Some people seem to be able to do it, but they’re stunningly rare. Most people aren’t in that category). The best overall strategy, therefore, is to diversify your portfolio and build from there.
Once you have some basic knowledge, you’ll want to return to the books once more. You’ll need to learn basic risk-return theory, plus variations on those theories that let you make better investing decisions. You’ll also need to understand different types of investing strategies and also coach yourself to accept that fluctuations in the market.
Lastly, once you have basic knowledge to make your first investment, you’ll want to learn when to sell when swing trading shows the right indicators or how to use trading apps, such as Robinhood, IG or Hargreaves Lansdown.
These brokerages provide tools that allow you to buy and sell financial assets as you please. In most cases, you’ll be investing for the long-term – more than ten years – so fees will be low. Look for trading platforms with low fees that offer simulation accounts to allow you to practice your skills.