Investing: Simple Success Strategies

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I could use some guidance. I’m about to graduate and enter the real world. My dad said now that I have a good job offer, I should begin thinking about how I can build wealth or my “nest egg.”


He’s been investing for a long time and wants me to follow in his footsteps. I wouldn’t be so opposed if it weren’t such a complicated affair. The funny thing is that his own brother tried investing a few years ago and apparently lost a ton of money. I definitely can’t afford to repeat his mistakes.


What should a novice know about investing before getting involved? Suggestions would be really helpful. The more information, the better.


Investing can often seem like an esoteric and divisive subject. Some people avoid it altogether because they consider it too complicated to try. Others dabble and squander what they invest or find some modicum of success through sheer luck, educated guessing, or some combination of the two. It’s usually it’s the professional investors and devoted hobbyists that manage to profit from making investments, and while it might seem overly complex from the outside, that isn’t always the case on the inside.


That isn’t to say that investing is easy; quite the contrary, in fact. Aspiring investors have much to learn before they can expect to see consistently worthwhile results. In other words, it’s imperative to understand that successful investing requires some amount of failure. No investor can make the right decision each and every time because nobody knows everything. That means everyone is subject to the same market circumstances and variability.


What matters is finding ways to win over the long haul. And how does one begin? Careful consideration and thoughtful planning are the first two steps. There are three main aspects of investing to reflect upon:


  1. Mindset

  2. Investment Strategies

  3. Tools/Resources

Many people focus heavily or almost exclusively on the latter two items on the list. Much of that has to do with popular culture and corporate advertising. However, it’s the quite frequently the first item on the list–motivation and mindset, which are inherently linked–that can make or break someone. At the end of the day, investors should have a clear handle on all three before they begin making decisions with real capital.




The mindset you bring to the table can have a disproportionate impact on your decision-making. That’s something the government wants you to take seriously. In fact, officials at the US Securities and Exchange Commission (SEC) maintain a public checklist highlighting ten things to consider before making any investment decisions. Unfortunately, exaggerated Hollywood blockbusters, sensationalist mass media narratives, and corporate whitewashing can often make it difficult for people to understand the true gravity of they plan to do. That’s why the opening two items on the checklist include: (i) drawing a personal financial roadmap and (ii) determining your risk tolerance.


Don’t make the mistake of being immediately intimidated by the notion of cobbling together a personal financial roadmap. It isn’t absolutely necessary to hire a certified financial advisor (CFA) or a registered financial planner (RFP). It’s entirely possible to draw a personal roadmap yourself. For instance, writer Henry Ong at Entrepreneur already published an article explaining different ways to design a financial roadmap. People often have misgivings when it comes to honest self-evaluation, but it’s absolutely essential to financial planning.


Determining your risk tolerance is a related exercise because your mindset and risk tolerance often go hand-in-hand. Kent Thune at The Balance wrote an informative piece to demystify the subject. According to him, risk tolerance “relates to the amount of market risk, such as volatility, or market ups and downs, an investor can tolerate.” He also does everyone the favor of introducing risk capacity, which is the amount of market risk an investor can afford to take. Successful investors understand that there’s a balance to strike depending on your risk profile (e.g., aggressive vs moderate vs conservative investment stances). Making investment decisions without having a clear understanding of these things would be a major oversight.


Another key to success is setting realistic expectations. Stanley Lim Peir Shenq (CFA) emphasized the importance of setting the right expectations on The Motley Fool. His wisdom is nearly universal, but it’s especially salient to aspiring investors because anyone embarking under the assumption that wealth will come quickly or easily are likely to be disappointed. Since the promise of investing originates from compound annual interest, it only makes sense that the tortoise should beat the hare. Investors should keep that in mind.


Investment Strategies


A confident mindset and a clear plan are both fundamental to starting the journey but they won’t carry you to your ultimate destination. That’s the purpose of investment strategies. To employ a metaphor, the mindset is the vehicle used to transport you from where you are to where you want to be. Strategies, on the other hand, are all the various routes you might take to get to that destination. As you might imagine, certain strategies, like routes, are more or less risky than others and have different pros and cons that must be negotiated.


Kent Thune once again contributed an important perspective on The Balance. He succinctly explains everything from fundamental and technical analysis to growth and buy and hold investing. The former two examples involve using calculations produce valuable insights (e.g., RSI trading strategy). The latter two much more frequently rely on news and current events to drive insights. It’s important to remember there’s a vast difference between active and passive investment strategies. As the name would suggest, active investing involves making frequent decisions to guide your investment outcomes. Examples include day traders and swing traders. Passive investing involves making infrequent decisions and simply waiting for the favorable outcomes to unfold over an extended time period.


Forbes contributor, Jeff Rose (CFP), outlined even more strategies for aspiring investors to contemplate. Nearly all of his suggestions are considered passive investment strategies. In fact, the most active approach that makes his list is paying off personal credit cards (i.e., reducing the proportion of personal debt to personal assets). He also encourages people to entertain the idea of investing in bonds and real estate investment trusts (REITs). Those options are less conventional but viable nonetheless.


The most important thing to do is select an investment strategy that complements with your mindset rather than undermining it. While that might sound like obvious advice, you’d be surprised how many investors make that mistake. Trent Hamm at The Simple Dollar emphasizes the fact that investing is one option amongst many. Putting money aside in a savings account is equally as reasonable for certain people. Electing to commit to a wealth-building strategy that fundamentally opposes your mindset is a recipe for disaster.


Tools & Resources


The final category of consideration has to do with the instruments investors can rely on to help inform their decisions. Returning once again to the previous metaphor, these instruments could be anything from a clock and speedometer to the directional lights and GPS. Each of them is essential to successfully arrive at your chosen destination. Investing is no different.


Utilizing tools and resources is more important than ever. Fortunately, there’s an abundance of options at your disposal. That means the real challenge is figuring out which ones are worthwhile. Forbes contributor, Rob Berger, crafted a shortlist of the best online tools to track your investments. Some of his recommendations apply strictly to monitoring assets whereas others apply to personal budgeting. People too often forget that those two aspects are effectively two sides of the same coin.


Joshua Kennon at The Balance composed a similar series of suggestions, albeit with a few more accessible pointers. Both authors reinforce the fact that these tools streamline and automate previously tedious and repetitive tasks, but they don’t make decisions for you. That’s why it’s crucial that the first two categories of thought be solidified well before you begin exploring tools and resources. At the end of the day, there is no shortcut to success.


“An investment in knowledge pays the best interest.” — Benjamin Franklin