When getting started with investing, it can be difficult at first finding a strategy that brings success.
There are so many different investing strategies you can try. There are so many decisions made in investing. It is easy at first to go down the wrong path or to make decisions that ultimately hurt us rather than help.
When I first started investing, I had dreams of getting rich quick. Because of those dreams, I got caught up in many different stock trading strategies that I believed were going to make me rich in just a short time. I had visions of trading stocks and making 100% returns within a few months. I thought it was going to be easy.
The truth is it wasn’t easy. Looking back, I can see that I was doing everything wrong. I was going about my investing in completely the wrong way.
Chasing hot stock tips, frequent buying and selling, no real investment plan mapped out. These are all mistakes I was making that ended up costing me money in the long run. My initial history of investing saw little success.
It wasn’t until I became familiar with the dividend growth investing strategy where I finally saw the light and changed my ways. I made a few changes in my investing strategy that eventually led me down the path of finally seeing success.
The 4 Things That Made Me Successful
Here are the 4 things that I did/focused on which I fully believe helped change me from someone chasing dreams of riches to someone who has much more successfully built up an investment portfolio that actually makes me money.
I created an investment plan. I believe one of the most important first steps when it comes to investing is creating a plan. This plan will be your road map. This plan will guide you down the path towards building a sizable investment portfolio and growing your net worth. Within this plan you need to figure out your goals. Why are you investing? Next you need to lay out your investing rules. What types of investments are you going to buy? When are you going to buy and when are you going to sell? Why are you going to buy and why are you going to sell? Create your investment plan including your goals, your investment strategy and your investment rules. Then follow this plan to reach your goals.
I focused on quality, dividend growing companies. The strategy I choose to use is dividend growth investing. Dividend growth investing involves buying quality companies that have a history of increasing their dividend rate paid to shareholders year after year. Companies that are able to do this have to have a solid business backing them up. They are able to generate profits and grow those profits in order to support a higher and higher dividend payment to their owners. I believe these are the best companies to invest in. I have switched my focus from chasing after the next hot stock to instead buying the largest, greatest, most profitable companies in the world. This has led me to see much more success over the years in my own portfolio.
I shifted to long term thinking. Before embracing dividend growth investing, I traded stocks very frequently. I would buy a stock based on someone’s advice or based on something I read online. A few months later when things wouldn’t be working out the way I had hoped, I would often sell that stock for either a slight gain or more likely a loss. After creating my investing plan, I shifted to long term thinking. I now buy companies with the intention of owning them forever. The companies I now buy are the greatest companies in the world. They are leaders of their industries. They have been profitable for years and have shown consistency by paying shareholders growing dividends every year. Due to their past performance, these companies have earned my trust. I buy them with the intention of owning forever. Of course, I still have to monitor and sometimes my rules will dictate that I should sell. But the selling happens very infrequently. In fact, when looking over my investing performance last year, I had not a single sell all year long.
I consistently saved and invested money month after month. When I decided it was time to seriously build my investment portfolio, I knew I had to lay out a plan. I needed to start consistently saving money in my portfolio. I created a budget. I track my income and expenses every single month. I make sure each month that I have designated a certain portion of my paycheck to be directed into my investment portfolio. I don’t necessarily purchase stocks each month. But I do save money each month. The money accumulates in my investment account and I make dividend growth purchases when I have found the right company at the right price to invest in. Over time, this habit has helped me grow the size of my investment portfolio substantially. Consistently save money and you will see your net worth increase over time.
By shifting my focus from the idea of get rich quick through the stock market to the idea of slowly building up an investment portfolio over time, I have seen drastic improvements in my investing results.
No longer am I chasing the next hot stock. No longer am I guessing and losing money.
No longer am I slowly treading water and making little progress in wealth generation.
I created an investment plan based on solid fairly conservative investment advice. I have been following that plan over the past few years. I have been steadily making progress.
As a result, my net worth has substantially grown and my investing portfolio is now working for me rather than against me.