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How to become a great investor

By Sam Instone - May 17, 2016

[Estimated time to read: 2.5 minutes]

offshore investingThere’s one thing stopping you from becoming a great investor.

Your personality.

But don’t beat yourself up too much. 

A recent study found that less than one in two hundred of us possess the behavioural characteristics that lead to great investing.

So if your personality is your biggest asset, find out how it could also be your biggest liability… 

Question 1: Do you have a short attention span?

Are you the person who ‘zones out’ in work meetings?

Do you get bored easily?

These are bad traits for investing.

Most investors buy for the quick gain.

These investors fail.

If the stock falls or goes sideways, they lose interest.

Much like marriage, investing is meant for the long-term.

Don’t be the one who looks back in 10 years and realises how rich you COULD have been if only you’d hung on.

Question 2: Have you the time to invest?

Investing is just that, an investment.

And the devil is in the detail.

You need to understand the principles of good investment which we have laid out in these 6 videos. If you haven’t got time to watch them – the truth is that investing might not be for you.

Question 3: Is your default to rely on ‘experts?’

Ever visited a fortune teller?

Much has been said about whether anyone in investing knows what they are doing.

Particularly those who are making a fortune off predicting the markets.

With investing, there is probably no other field where the experts know as little.

Start by Googling ‘Jim Cramer Bear Stearns’.

Question 4: How do you feel about taking risks?

It’s always in the small print.

And rightly so.

Investing is risky and you will lose money.

So if you think you know your tolerance to risk, probably best to sit down with an adviser and go through this again, in detail.

You need to have a stomach for crashes.

Feeling nervous now? Probably best if you look for alternative ways to get rich. 

The lottery?

Question 5: Are you a sheep, or a lion?

Like the great Warren Buffett said “Be greedy when others are fearful and fearful when others are greedy”.

A great investor will have courage.

A bad investor will follow the crowds.

But there is one crowd you should follow. And that’s the index.

Averaging more than 8% over the last 10 years – it’s the one time in investing when you should be a sheep.

Your emotions will ruin your investment success – so whatever they tell you, do the opposite.

Question 6: Do you have an addictive personality?

Like gambling?

For many people, investing is like living it up in a casino.

Moving from the Craps table to the slot machines and back again.

But investing isn’t supposed to be entertainment.

And we all know how most evenings at the casino end.

Investment done well is like watching grass grow and paint dry!

Question 7: Are you a tad egotistical?

Overconfidence can be a dangerous thing.

That’s why surgeons can often make poor investors.

No doubt they excel at their own highly complicated profession.

But investing in the market is not like performing surgery.

Markets are full of random, unpredictable events.

Thinking you know (or that anyone knows) what the market or your own investments will do on a day to day basis is a sure way to fail.


So ask yourself, do you ever say “I was wrong”?

How great are you at investing?

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