Perhaps one of the most enduring question in the world of investing is this: What makes for a successful investor? How is it that Warren Buffett can become a billionaire by picking stocks successfully over a period of decades while many others fail to achieve anywhere near that success?
Well, two people have gone to great lengths to answer the question, and provide a specific list of traits that distinguish successful investors from the rest of the pack. Thomas J. Stanley and Sarah Stanley Fallaw have written a book titled The Next Millionaire Next Door: Enduring Strategies for Building Wealth.
A study of 600 millionaires
In fact, according to Hillary Hoffower of Business Insider, the authors of The Next Millionaire Next Door went and studied 600 millionaires in order to determine what made them successful. And the answers are revealing.
According to Hoffower, this list of traits exhibited by successful investors is a rather curious mix. Specifically, although successful investors have a preference for high-risk, they also tend to have a personality for risk. In other words, it’s one thing to want to engage in risk, it’s another thing to have a personality that’s suited for it.
Speaking of personalities, also among the list of traits of successful investors are composure and confidence, which means that successful investors have to contain their zest for risk with discipline and self-assuredness. It’s an overall blueprint for investment success that many find hard to follow, isn’t it.
Know your stuff
However, beyond the first four traits listed above — high-risk preference, high-risk personality, composure and confidence — the fifth trait of successful investors in fact further differentiates the truly successful investors, the millionaires, from the rest, and that’s knowledge.
Specifically, the most successful investors tend to know their stuff and do their homework. In fact, according to the research in the book, millionaire investors tend to spend about 10.5 hours a month planning for future investments. And it’s this knowledge and expertise in investing that helps successful investors exhibit the other traits of successful investing, such as a penchant for risk, confidence and composure.
ASCEND GRP is an asset-management firm, with offices in Toronto, Richmond Hill, and New York, that services clients seeking investment opportunities worldwide.
