Only half of young Americans are involved in some sort of investing. If you are part of the 50% of those who do invest and want to take your passion a step further by turning it into a career, you’ll want to consider a few things before quitting your day job or changing your major. Investing as a career path, while potentially very lucrative and fulfilling, requires a very specific set of skills and the right experience to succeed, and understanding these skills will help you get a head start before you even enter the field.
Understand What Behavioral Finance Is
As an investor, you’ll want to get really good at being objective, especially in stressful situations. Learn quickly how to remove your emotions from the situation and how to understand behavioral finance’s role in investing. For example, traditional investment models assume that investors have every single piece of knowledge at their disposal, which simply isn’t true. Behavioral finance aims to understand anomalies such as attention bias, national bias, under-diversification, and even cockiness in hopes that, by doing so, investors can learn to avoid them. Essentially, you’re trying to become “less human” as an investor, which will help you avoid the pitfalls and mistakes that humans make in the field. Read as much as you can about the entire world of investing and familiarize yourself with trends like these to stay ahead of the game.
Know How to Take Risks
If you’ve effectively “dehumanized” yourself in regards to how you trade, then the next step to becoming a successful investor is really becoming comfortable with taking big risks. In this industry, this is most often referred to as risk tolerance, which is your ability to handle a loss. Bulking up your risk tolerance will serve you well and learning how to take risks in the first place will help you even more. Start out small and work your way up with bigger and bigger risks each time. Investing in precious metals, for example, is a great way to protect your portfolio from inflation and also a smart way to make money during an economic downturn, according to MoneyMetals.com. While some might see this type of investment as a risky choice, due to the fact that others believe that commodities might be all that we have left in the case of a global economic crisis, it’s a risky move that just might pay off big. Choices like this, as long as they’re well-informed, are what will set you apart from everyday traders.
Don’t Give Up
Most successful traders still lose small on at least half of their trades, so it’s important to set yourself up for a career of “losing” over and over again in order to reap the benefits of the wins. While this might sound a little negative, it’s actually really exciting for the right kind of person who thrives on challenges and makes constant personal and professional improvement a big focus in their life. If you sound up to the challenge, then all you need to develop are the skills and the patience to make it big as a top investor.