Steps to a Successful Investment Journey

    If you expect your investing career to become an overnight success, it is time to rethink your approach. The most renowned investors are not made in a day. 

    You will need to polish your investing knowledge, gain lots of experience, and learn from your mistakes. Above all, you need to be patient and track industry trends. 

    In this article, you will learn the essential steps of your investment journey. 

    Determine What Kind of Investor You Are

    Your personality determines your investment decisions and risk tolerance. The BB&K Five-way Model and Investment Behavior of Individual Investors explains that the best. 

    That behavioral model classifies investors based on their method of action (careful/impetuous) and level of confidence (confident/anxious). 

    Based on these personality traits, they classify investors into the following categories:

    • Individualists have industry experience and a certain degree of confidence about their investments. They are careful, rational, and analytical when making investing decisions.
    • Adventurers are willing to put all of their money into a single investment opportunity. They are self-confident and eager to take risks. Adventurers believe they understand the market the best and are hard to advise. 
    • Celebrities are afraid of missing out on exciting investing opportunities. They track the latest trends and like to be where the action is.
    • Guardians are worried about their money. They do not care about volatility and making money fast. Believing they are unable to predict the future of their investments, they focus on low-risk investing options.
    • Straight arrows are well-balanced and highly knowledgeable. They make unbiased investing decisions and take moderate investment risks.

    You may be asking yourself why your behavioral patterns matter. They are crucial because they determine how you deal with stressful or unexpected situations. That is why you should analyze your traits realistically. That is how you can identify your weaknesses, minimize them, and manage your assets strategically.

    Choose the Right Investment Type for You

    One of the first steps to take is determining what types of investments are perfect for you. Investing can be overwhelming for individuals starting their investment careers. That is why we will briefly walk you through the basic investment options. Some of them are:

    • Stocks (shares or equities) – when you buy them, you are purchasing an ownership stake in a publicly-traded company. That is one of the simplest investment types.
    • Bonds – when you buy bonds, you are lending money to a business. Once you lend the money, you get interest payments. When the bond matures, you will get your principal back. 
    • Mutual funds represent a pool of your money that you allocate to multiple companies.
    • Cryptocurrencies are an emerging market to invest in. While Bitcoin is the most popular online currency, you can also invest in Ethereum or Litecoin.
    • Commodities are the physical products you can invest in.

    The goal is to choose between low-risk and high-risk investments. Pick the investment type that meets your goals and aligns with your overall career plans.

    Diversify your Investing Portfolio

    Your personality, budget, and industry experience impact your investing strategy and path. While some investors decide to risk and put all of their eggs in one basket, others prefer investment diversification.

    As an industry rookie, consider choosing the latter option. By diversifying your investments, you will reduce the risk of failure and gradually learn by doing. 

    Simply put, diversification is a management strategy that brings different investments together in a single portfolio. It reduces the risks and improves your return on investment. 

    Now, diversification is not a new concept. Here are a few tactics that will help you build a diversify your portfolio.

    Know When to Get Out

    Monitor the performance of your investments and track any changes in the market conditions. Read the news about the companies you invested in. That is how you know when to sell your stocks and move on to your next investment.

    Find a website or install a business news app that covers the latest financial news. On Ausbiz, you can learn about market trends, stay on top of company news, and listen to podcasts.

    Spread Your Investment Strategically

    Do not allocate all of your money to one industry or in one stock. On the contrary, build your mutual fund (we explained it in the section above). The goal is to invest in multiple trustworthy companies. 

    Additionally, experiment with the investment methods, including exchange-traded funds, real estate investment trusts, and commodities. 

    On the other hand, try not to get overwhelmed. Keep your portfolio strategic and manageable. Making 50 investments does not make sense if you do not have the time and money to keep up. 

    Learn More About Commissions Before Investing

    As a first-time trader, there is a lot of things you need to learn. One of them is commissions. In other words, you need to ask yourself what you are getting for the fees you are paying

    While some companies charge a monthly fee, others opt for transaction fees. They charge them every time an order to buy or sell a stock or a mutual fund is placed. 

    Therefore, if you invest small amounts of money as a beginner, transaction fees can add up fast and compromise your budget. That is why you should familiarize yourself with the commissions before investing. Most importantly, keep track of any potential changes to your fees.

    Build an Investment Strategy

    Many inexperienced investors neglect the importance of having a strategy. They jump from one trade to another without monitoring their ROI and measuring their overall efforts. 

    Without a clear investment strategy, your portfolio may look like randomly chosen investments that have no objective. 

    Therefore, behind every successful investor, there is a realistic, measurable, and repeatable investment plan. 

    Now, having an effective strategy means being able to communicate your investment goals and tactics to your clients or partners. To achieve this, you need to:

    Write your strategy down

    By writing your strategy, it will be easier to communicate it to others. It keeps you on the right track when you get overwhelmed with potential investment opportunities. 

    If you tend to become a professional investor, a clear strategy will build trust with clients and help you achieve your goals faster.

    That is why you should make sure it aligns with your long-term investment objectives.

    Determine your competitive advantage

    In the fierce investment market, you need to know what your competitive advantage is. 

    For example, you may have extensive industry knowledge. Maybe you have access to the documents and research studies that few other investors have. 

    Once you determine your competitive advantage, establish your trading plan. It includes the rules of buying and selling investments. 

    Measure it

    You cannot understand the success of your investment strategy if you do not measure it. 

    For starters, set clear investment objectives. They should align with your investment strategy. Always keep your goals SMART – specific, measurable, achievable, realistic, and time-bound. Always set time frames for your objectives. Break them down into short, intermediate, and long-term goals. 

    Once you have goals, set your key performance indicators. They help you assess the effectiveness of your investment plan. They should be in line with your investment objectives. There are usually two types of benchmarks – relative and absolute. 

    Finally, evaluate the risk you are taking relative to your investment KPIs. For example, you can measure the volatility of your portfolio returns and compare them to the volatility of your benchmark’s returns over the same period. You can also measure your ROI using the Treynor Ratio and the Sharpe Ratio.

    Be Willing to Keep Learning 

    Your career as an investor can be turbulent. Remember that this is a highly volatile market. Therefore, when entering the investing sector, expect to make a lot of mistakes. You need to acknowledge your mistakes and learn from them.

    There are also many courses on investing that can help you learn more about the industry. Here are some of them:

    • Stock Market From Scratch for Complete Beginners (Udemy)
    • Investing Classroom (Morningstar)
    • Beginner’s Guide to Investing (Erin Lowry)
    • Master the Market Bundle (Jannese Torres-Rodriguez)
    • How Not To Suck At Investing: Understanding Stocks (Business Casual)
    • Investing Masterclass (Wealthsimple) 

    When looking for an investing course, there are several factors to consider. Apart from price, you should also pay attention to the course description and content. Any reliable class provides a detailed overview and syllabus. Read through the topics to understand whether the course meets your needs.

    Additionally, look at reviews and customer testimonials. By reading other users’ experiences, you will determine whether the course is reliable. Also, look at the instructor’s professional credentials and investing experience. The goal is to watch out for scams and self-proclaimed investing experts. 

    Over to You

    Investing can be a lucrative career. That is why you need to plan your progress strategically. Here are a few takeaways to keep in mind:

    • Identify what investor type you are, based on your personality traits.
    • Choose the right investment opportunities and diversify your investments.
    • Write down a detailed investment strategy and measure its effectiveness.
    • Keep improving industry skills and knowledge.

    I hope these insights will help you!


    • Scarlet is a passionate writer and regular contributor at interested in fashion, lifestyle, and health. She loves traveling, you could say that she is a real travel addict, especially when she has a chance to visit some exotic destinations. She would tell you that inspiration can be found in the most unexpected places.

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