You have probably talked with your friends, colleagues, or close family and at one point heard them make a remark about how they would like to be an investor full-time.
Many people dream about being an investor full-time, but is it really possible?
Let’s find out together if you can make a living on stocks!
In order to succeed with being a full-time investor it is required to no longer treat investing as a spare time activity. You need to spend time researching stocks, analyzing charts, and managing your money. In order to achieve this goal it is extremely important to treat it like a full-time job.
Before becoming an investor full time it would be wise to ask yourself these questions:
Is it enjoyable for you to invest? No one can be fully committed to something, but not enjoy the process. There will be moments when you would want to give up and this will test how committed you are to investing full-time.
Why do you want to become a full-time investor? Are the potential riches enticing you? Do you want to be able to brag that you accomplished one of the hardest things possible?
Are you good at selecting stocks? This is a central component to be able to support yourself full-time via investing. Remember your bank balance is low or high depending on what value you are providing. If you are a worse investor you will make less money.
In order to invest you need to decide how much you are going to invest. Select a budget that you are comfortable with in the beginning and make sure that most of your money is invested in steadily paying assets. For example, select 10 different companies that pay dividends to their shareholders regularly. Also, make sure that you receive dividend payouts every month. Invest in one company that pays out dividends in January, one in February, and so on.
This will help you be more financially secure and increase the probability of being a successful investor full-time.
Look at investing like a game of chess. In order to win you will need a strategy!
Value Investing is one suitable strategy. It entails paying less money than a stock should be worth and reaping the rewards from that. It protects the investor from fatal mistakes concerning the judgment of what fair value is. The opportunity for profitable returns grows exponentially and minimizes the possibility of losing significant funds. However, when you are using this strategy you are hoping that the market changes its valuation of the stocks you have purchased.
Growth Investing is a strategy for buying stocks that only looks for companies that are anticipated to increase their value. By using this strategy you should focus your efforts on companies that have just been listed on the stock market because they have a larger chance of being profitable in the future than already established companies. There are five factors that need to be considered when utilizing this strategy. The company’s earnings historically and expectations for the future, the company’s amount of profit, the expected price performance of the shares, and lastly the return on equity.
Momentum Investing is when you want to capitalize on certain trends in the market. You want the share prices caused by the trend to continue and not fade away. This strategy is not recommended by investors, because it is seen as unreliable to rely on trends.
Passive Investing is more of a long-term strategy compared to the other strategies. This strategy is mostly focused on building wealth by purchasing secure assets that work like stock market indexes. Passive investing is based upon holding these securities for a longer period of time almost guaranteeing good returns. Think of passive investing as purchasing a basket of goods. It is a mix of different assets, not individual shares.
Having a strong mentality is another thing that is crucial to achieving this massive goal of becoming a full-time investor.
There will be times of extreme doubt when you question every decision you have ever made as a full-time investor. You may get the urge to go back to your job and throw in the towel.
Your friends may be better off financially for a while, your girlfriend might leave you. How will you react when your portfolio loses half its value?
Before you are able to shut out all of the noise and control your mind you need to develop habits of delayed gratification= “The ability to delay an impulse for an immediate reward to receive a more favorable reward at a later time is the standard definition of delayed gratification”.
These habits are working out, limiting your use of social media, and waking up early.
In conclusion, it is possible to become a full-time investor if you are committed to spending much of your time investing. If you develop a strategy that you utilize when investing and if you have a strong mentality.
In other words, it is a difficult task, but highly achievable!