The best Predictors of Investment Success

You might be amazed how very successful and rich persons like Warren Buffet, Bill Gates, and Donald Trump (to name a few) have accumulated massive amounts of wealth. These people are very successful investors and you might wonder what these few have that most people don’t. There is no secret in their success, they just have the necessary knowledge, experience, guts, and risk tolerance that most people don’t have. They simply know what to do, comprehend, and control their investments that most people don’t or can’t do.

However, you don’t need to have the knowledge, guts, wit, and even the amount of money that these people have in order to make a successful investment. In fact, you can already make a lot of money with what you have right now. All you need to know is how to look at your investments if it is heading the right way or what are the necessary adjustments and steps you have to do to make it a success. Here are some investment predictors that you have to constantly look at:

1.) Did your investment hit your goals? Goals are very important in investment. Without goals you are investing blindly and you can lose direction and motivation. If your investments didn’t hit your goal, it doesn’t necessarily mean that it is a failure. You may just have to do several adjustments to make it more profitable. Set realistic goals because unrealistic goals can never be achieved no matter what you do. For example, you invested in the stock market and set a 40% gain after a year. 40% is high but is doable but you can’t earn that much by randomly picking stocks. Instead, you looked at the financial statements and plans of several companies and picked the ones that has the best potential.

2.) Did your investment beat inflation and tax? Investments aren’t spared from tax. Real estate properties have property taxes, paper assets have taxes during transactions. Tax should not be overlooked even though they take just a very little portion of your investments. No matter how small they may seem, tax could mean a very huge amount. Find ways for you to lower your tax by rearranging your financial statement. Inflation is a very important thing to consider. If your investment earns lesser than the inflation rate, your investment isn’t gaining. In fact, it is losing some of it’s value. Keep track of the inflation rate and try to see if your investment is earning higher. If it is, you are in the right path towards investment success.

3.) Assets vs Liabilities. Are your assets greater than your liabilities? Are you earning more than you spend? If both are yes, then your investment is a success. The goal of investments is to earn a profit and such profit could be earned by spending and other liabilities which could increase investment turnout. Debt and expenses are normally unavoidable in investments. You may resort to loans, equipment purchases, and have to pay your personnel. These outward cash flow brings more money inward. Always keep track of your expenses and liabilities and keep it controlled. If liabilities aren’t controlled well, it can ruin your investments.

4.) Patience and discipline. This has more to do with you as an investor, than your investments. If you develop patience and discipline over time, you are in the right track to achieve investment success. The growth of your investment will never happen overnight. If you can resist the temptation of taking short cuts and seemingly get rich quick schemes, then you’ve got the attitude that it takes to become a successful investor. Patience and discipline means sticking to your plan and avoid making quick decisions because of your emotions.

Before investing, get to know the things that you need to know first. It doesn’t necessarily take money to make money. The best investment that you can have is knowledge. Improve your investment knowledge first before starting one. Knowing what things to look out for in determining your investment success is essential to look where investment is heading.