5 Secrets of Successful Personal Investors

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Have you considered investing, but you’re not sure where to begin? Every investor, including the most successful ones, had to start somewhere. We’re here to tell you a few secrets of successful personal investors to help you get started. We’ll review a few tips and tricks to help guide your investment decisions.

Secret # 1 – Timing the Market Isn’t a Good Strategy

You may have heard that timing the market is the best way to earn more returns. The problem with timing the market is that it’s not always predictable, and attempting to do so could easily be a full-time job. Additionally, if you continually buy and sell your investments, you’ll pay a lot in commissions and fees.

Instead of trying to time the market, diversifying your investments may be a better strategy. The first way to do this is by continuing to invest a set amount despite what the current market is doing. Eventually, you’ll have shares that you bought high and those that you bought low, helping to even out your earnings. You can also diversify your investments by choosing different types. Investing some of your paychecks into technology stocks and then some of your savings into a real estate investment helps you minimize risk. If tech stocks decline, you still have the opportunity to earn through real estate and vice versa.

Secret # 2 – Your Loan Matters

Don’t get so eager to invest in a real estate asset that you choose the first lender willing to finance your project. Instead, take the time to learn about what loans are available, as this can significantly affect your returns. For example, a conventional loan typically has strict debt-to-income requirements, and waiting around until you can be within the requested range could lead you to lose a lot of earnings.

If real estate investing is one of your financial goals, a debt service coverage ratio (DSCR) loan may be a better option. A DSCR loan in New Jersey (or any other state) allows you to obtain financing based on the project’s projected income rather than your current debt or income. Give yourself ample time to review lenders and loans so you can find one that fits your financial and investment goals.

Of course, you can also explore other lending options to make sure you choose the right one for your financial situation. A home equity loan of credit may also be an option for existing homeowners.

Secret # 3 – Manage Risk Based on Your Age

No one wants to lose their hard-earned money in an investment. However, without risk, there is no reward. The best way to determine your risk tolerance (how much risk you’re willing to accept) is to consider your age. If you’re in your 20s or 30s, you have more time until retirement, meaning you may have more room for risk. If you lose out on an investment, you still have time to make it back. If you’re in your 50s or 60s, you’re likely closer to retirement, which means you may not want to risk all your money since you won’t have as long to get it back if you lose.

Of course, you’ll also want to consider other factors when determining your risk tolerance, like your financial goals, income, portfolio size, and your overall experience.

Secret # 4 – Continuous Learning Is Crucial

The best investors continue learning. Even after experiencing multiple wins, they continue learning about new investment options. Real estate investors closely follow the local market in which they invest to learn about new opportunities. The investment industry is continually changing, and ongoing learning is the only way to keep up with it. Making education a priority is also important to avoid rash decisions, one of the biggest barriers to investment success.

Secret # 5 – Networking May Be More Important Than You Think

Networking isn’t just for corporate or political positions. Networking is just as important when it comes to investing. Whether you’re investing in a new business in your community or an investment property in your favorite vacation destination, having a network of trusted advisors can be extremely helpful.

Take real estate for example. The best real estate investment projects are ones that may be priced lower due to a need for repairs or renovations. These property types typically go fast, with investors ready to buy as soon as they hit the market. Partnering with real estate agents, lenders, and inspectors in your area can help you speed up the acquisition process, helping you secure the best projects.

Investing, whether in real estate or stocks and bonds, can be an excellent way to supplement your income. Some successful investors may even turn their investment projects into a full-time income. Reviewing these secrets of successful investors is a great way to begin your investment strategy.