Investing in the stock market can make some people a fortune. Even if it does not do that for me, I hope that adopting the right investment strategy can help me build wealth over the long term. But with so many experts already competing in the stock market, how can one learn about investment as a beginner with limited funds?
I can pay to learn more, which sometimes might help me a lot. I would also try to learn for free, using the three techniques below.
1. Learn from proven masters
There are loads of investors who have done very well in the stock market.
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One famous example is Warren Buffett. A lot of investors like to learn from Buffett because he publishes a detailed annual letter to shareholders in his company Berkshire Hathaway. It is accessible for free on the company’s website.
But I also learn about investment by studying other investors who have a proven track record of success, such as Peter Lynch and John Templeton.
What has worked for such investors might not be suitable for me. My skillset and emotional framework are different, their investment objectives may not match my own, and today’s market is not the same as yesterday’s, let alone that of decades ago. But by learning what has helped successful investors, I think I can develop and improve my own stock market investment strategy.
2. Mistakes can be costly but valuable
Another reason many people look to Warren Buffett for investment wisdom is that he does not just dwell on his successes. He often talks about his failures too. Buffett freely admits to his errors, saying, “I make plenty of mistakes and I’ll make plenty more mistakes, too”.
But while we all make mistakes, what sets Buffett apart from some investors is that he tries to learn from them. Indeed, he is on record saying that he likes to study failure.
Starting out in the stock market, it can be easy to make costly mistakes from day one. I think that is understandable, because as a beginner one’s investment skillset is limited. But rather than dwelling on such errors or simply pretending they did not happen, I focus on using them as learning opportunities. Hopefully, if nothing else, expensive mistakes today can make me a better investor in future.
3. Build my own investment strategy
Another way I try to learn is by reviewing my own performance regularly.
To start doing that for the first time, I would develop an investment strategy based on my experience and knowledge. Rather than let it gather dust, I would regularly return to this strategy and assess my performance against it.
That may help me change some of what I do. But it should also mean that I evolve my strategy over time as I learn more. Doing this could also help me identify gaps in my investment knowledge, leading me to look for more resources to help me learn and improve. The more I learn, hopefully the better an investor I can become.
