In fact, you might be surprised to learn that women often earn higher returns on their investments than men.
They also tend to add more to their account balances over time.
But there is still a confidence gap when it comes to women and investing.
Many women don’t invest their money (or enough of it) because they lack confidence. This causes them to miss out on the power of compounding (earning interest on top of interest) for years.
Instead, women tend to “play it safe” by using savings accounts rather than investing their money.
While using a high-interest online savings account for your emergency fund is a smart money move, the interest you earn will barely keep up with inflation.
Investing not only fights the effects of inflation, but it also helps grow your net worth over time – better preparing you to take care of yourself in retirement, assist your aging parents financially, or help with expenses such as college for your kids.
If you're worried you don’t have what it takes to be a successful investor, keep reading to learn more about the traits and habits helping people build wealth through investing.
And don’t be concerned if you don’t have all of them! Instead, find ways to build on your strengths and address your weaknesses. That’s the recipe for finding success with investing.
7 Characteristics of Successful Investor
1. They are patient.
We’ve all heard the expression “patience is a virtue” before. And it certainly makes sense when it comes to growing your wealth through investing. Most people invest over decades to meet their long-term financial goals.
The ability to continue investing money regularly – sometimes waiting years to see significant gains – requires plenty of patience. But those who “stay the course” are often rewarded with big profits.
Success Tip #1: If you lack patience, automate your investments so you don’t have to think about them and how they are performing very often.
Put away the passwords to your accounts, avoid reading about and listening to the daily hype on the markets.
Stick to your investing strategies and revisit your financial plans at a set time each year.
2. They are learners.
To be a successful investor, you have to make informed decisions.
For some people, this means studying market trends, reading investing journals, conducting due diligence on assets they want to purchase, and buying and selling individual stocks.
Others prefer to let financial professionals make investment decisions for them. But this doesn’t give them a pass on learning about investing.
Success Tip #2: It’s still essential to have a solid understanding of where your money is invested and how investment management fees can impact wealth building.
You also need to monitor your portfolio performance and meet with your financial advisor regularly about your investments and progress toward financial goals.
Personal Capital is a great tool for helping to track your investments. And their Retirement Fee Analyzer can help you understand what fees you're paying.
3. They seek help when they need it.
Taking the time to learn on your own is important – but savvy investors also know when it is time to learn from others.
Success Tip #3: If you’ve made mistakes investing or lack specific skills or traits of successful investors, you might seek the help of a financial coach.
Attending a workshop or conference or taking a course can provide the information and interaction you need to move forward.
4. They understand the risks involved.
To be a successful investor and meet long-term financial goals, most people have to consider some exposure to higher risk investments due to inflation.
But you also have to know yourself and your level of risk tolerance.
Success Tip #4: Higher potential returns indeed come with higher risk. But some investments are riskier than others.
Those who are risk-averse might shy away from most higher-risk investments, but they need to understand they're minimizing opportunities to earn substantial returns when they do.
Successful investors understand the risk-return relationship and build diversified portfolios aligned with their long-term financial objectives.
5. They are confident.
It makes sense that your confidence with investing will grow if you have a good understanding of market history and a commitment to learning more about investing and seeking help when you need it.
Success Tip #5: Successful investors aren’t just confident; they have humility too. They expect volatility in the market but understand volatility and loss are not the same things.
Confident investors know when to pause and stick with their plans and when to take action, and change course.
They evaluate their portfolios to ensure diversification and consider harvesting tax-losses or tax-gains to minimize tax liability.
6. They focus on their goals.
Your investing strategy should be aligned with forward-looking goals, and you have to be disciplined enough to stay focused on those goals.
Success Tip #6: Successful investors understand they have no control over inflation or the stock market. But they consistently invest for their future, diversify their portfolios to reduce the risk of losses.
They also review their financial mission statements to make sure they are on target to meet their goals.
7. They control their emotions.
We all have different money stories that influence our behaviors and investing experience. While some people find it easy to ignore market ups and downs, others struggle to not act on the emotions of greed and fear.
Success Tip #7: You may think you’ll act rationally and always use data to inform your investing decisions. But plenty can go wrong when it comes to managing emotions and money.
Staying focused on your goals, remaining calm, and ignoring the “noise” during market turmoil are keys to being a successful investor.
Becoming A Successful Investor
You invest money to make more money and build wealth. And one of the most important things you can do to get better at investing is to reflect on your traits and habits and compare them with those of successful investors.
The good news? If you lack some of those characteristics, there is a lot you can do to improve or make up for what you’re missing.
While you might be able to address some of your weaknesses without assistance, don’t be afraid to seek the help of others, including a financial coach. You may have to spend some money to make more money in the end.
Just remember that everyone can learn how to invest. And the sooner you learn about and understand concepts like compound interest, the more time your money will have to grow.
- Is Real Estate Investing a Good Way to Build Wealth?
- Is Investing a Lot of Money at Once the Best Idea or Should I Spread it Out?
Vicki and Amy are authors of Estate Planning 101 – a Crash Course in Planning for the Unexpected -coming soon from Adams Media.