Investing: Experience is the best teacher
Written by R. A. Stewart
“He who never made a mistake never made anything”-Jim Addison, Scottish evangelist
In investing as in anything else in life there is no substitute for experience. It is all very well learning about how to become a good investor but it is only when you start investing your own money in the markets when you learn how to become a good investor.
Some investors play the markets on paper and are excited that their paper portfolio is showing a profit on paper so start investing real money and soon find that the markets don’t just rise but fall as well.
It soon dawns on them that what goes up also goes down.
It is important to get used to the volatility in the markets and ride out the lows. If you are clear on why you are investing then the highs and lows are not a problem.
There are two ways to learn:
- Your own mistakes
- The mistakes of others
You can reduce your own mistakes by getting yourself financially literate. This comes from reading books on investing and finance and from learning from the mistakes of others.
There is nothing quite like making your own decisions as to where you are going to invest your money. The satisfaction to be had when your judgment is spot on, but you will make mistakes along the way as we all do.
Don’t beat yourself up if some company you had shares in fell by the wayside. Learn from your mistakes and move on. It is important to not let the market volatility deter you from investing.
If you are new to the world of investing then think of it this way. If you are learning to drive a motor vehicle, learning how to use a computer, or learning the ropes in a new job, you will make mistakes but as you gain more experience your level of competence will grow and your mistakes will be less and less.
Learn all you can about the ins and outs of the market and apply it to your own personal circumstances. The older investors have been through a number of roller coaster rides with the share market over the years and are worth listening to for their opinion, but it pays to have the discernment to know who is worth listening to and who not to take advice from.
A few people were scared from the 1987 share market crash, called “Black Monday” that they never invested in the share market since. Such people have missed out on the gains since 1987 and the experience would have made them good investors.
Good judgement comes from past bad experiences; it is all a result of the lessons taken from previous experiences.
Investing experience will give you the ability to make better choices in the future and this helps to increase your future wealth.
Never use the excuse, “I don’t have any experience in this or that”, we all started from somewhere, and today it is possible to start investing in the markets on a shoe-string with all of these investing apps.
All the best
About this article
The information here is the opinion and experience of the writer and is not financial advice, therefore discretion is advised.
Read my other articles on www.robertastewart.com
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