When discussing investment skills, most will suggest that you turn to more experienced individuals for advice — people who have been playing the markets, diversifying their holdings, or who specialize in the type of investment you’re considering. This is, of course, good advice, but what many don’t consider is that the majority of the skills you need to be a successful investor are things you learned in high school and college.
Basic study skills form the core of good investment practices, and that includes doing your research, taking notes, and staying organized. Even the practice of consulting with more experienced investors comes straight from the study skills playbook — it’s the equivalent of seeking out peer tutoring. It’s all very simple.
As we head into 2017, get your financial resolutions in order with these three study strategies. It’s amazing how a few basic skills can transform your investment practices.
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Reading books about investing is an important part of developing a strategy, learning about different markets, and understanding the context you’re working in, but reading alone is not enough. Rather, you need to learn to read more effectively if you want the research to benefit you.
As a student of the financial world, you should enter every text with a goal in mind. What do you want to learn by reading this book or article? Based on that goal, you’ll read and analyze a given text to determine what valuable information it contains. Remember — not everything you read about investing is true. It’s up to you to read, interpret, and then apply what you’ve learned and filter out misinformation.
How do you organize your investment information? Do you just pop open a window with your accounts and see what’s happening? Do you save articles in a folder or print them out? It doesn’t matter what you do to keep your financial information in order, but it does matter that you always stay organized. Just like in school, disorganization will cause you to fall behind and misplace important information — and that can mean missing your big financial break.
To start, determine whether you prefer to have paper or digital resources, and then based on the information, choose a system for putting your market research in order. Create folders on your computer or file them in a box for reference. By clearly sorting and labeling what you’ve researched, you’ll have an easier time processing it all and making smart investment decisions.
In addition to organizing your research, you’ll also want to have a clear schedule for following up on investment opportunities. Create a timeline or weekly schedules that delineate what tasks need to be completed and block out time in your schedule to work on meeting these goals. You need to make time to make money.
Clear Up Communication
At one point, most schools emphasized independent work, but today more importance is placed on group work and communication than ever before. That’s because today’s economic environment prioritizes the ability to work as a team and communicate clearly with others.
Communication skills are especially important to your investment life if you work with a consultant or other financial adviser, but they’re also critical if you’re just asking a friend for advice. They need to clearly understand your investment intentions and goals, and you need to be able to interpret and respond to the information they give you in return, asking appropriate follow-up questions.
When you realize that the most valuable investment skills in your arsenal derive from things you learned in school, you’ll come to the table feeling more equipped to participate. You know more — and have the ability to learn more — about investing than you may have thought. It all comes down to using your time efficiently and using a critical eye to manage your investments. At the end of the day, it’s really no different than preparing for a big test or paper, and you’ve been doing those things for years.
Do you apply habits you learned in school to your investing?
Let’s talk in the comments section below!