Numbers, graphs and research.
That’s what naturally comes to mind when asked about investment skills. You should have the ability to crunch numbers to calculate percentages and margins, you must be able to study graphs to understand market trends, and you must be willing to do a lot of research to help you make good investment decisions. These three along with other core skills are must-haves for every serious investor — beginner or expert.
But the reality is, we can sometimes feel woefully unequipped to handle all the curve-balls the investment world throws our way. That’s because, before we become investors, we are first humans. As humans, we get by daily challenges and situations with the aid of skills that have nothing to do with finances. You can call them “life skills”.
Apart from a few individuals who have made investing their primary vocation, most investors are regular people with regular jobs that are trying to build wealth for themselves and perhaps for future generations. That’s the more reason why investors should consider learning skills other than numbers, graphs and research.
Having top-notch investment skills and financial knowledge is only the tip of the iceberg when it comes to excelling as an investor. You need to master these essential non-investment skills to truly get ahead.
So, what’s a non-investment related skill that every investor should learn?
1. Effective communication: Both in personal and professional life, effective communication is really important. It makes us have a better understanding of people and situations, build trust and respect, and create conditions for living and thriving. When we invest, we are dealing with real people. We need to ask the right questions to get answers in the form of investment opportunities or knowledge required to make better investment decisions
2. Listening skill: In the words of Larry King, “if I’m going to learn, I must do it by listening.” Effective listening is a skill that underpins all positive human relationships. Genuine listening helps build relationships, solve problems, ensure understanding, resolve conflicts, and improve accuracy. Strong listening skills are an essential part of the skill set of every investor because they can help you get good advice, get in on great investment opportunities and attract powerful business relationships.
3. Independent thinking: It feels logical to get information and apply it “as is”. However, you need to develop the ability to filter information through your own lens to inform your thoughts. Independent thinkers don’t allow other people’s thinking to become their thinking. When everybody is investing in a company, you should be able to step back and review the opportunity instead of joining the bandwagon. Independent thinking will help you to stand your ground and make your own decisions.
4. Networking: By now, you must have heard that “your network is your net worth”. When you invest in your relationships, it can pay you back in dividends throughout the course of your professional and personal life. Networking will help you stay on top of the latest trends, keep a pulse on the stock market, and gain access to the necessary resources that will foster wealth creation.
5. Emotional intelligence: Success in any field is often linked to a high IQ, but in reality, your ability to understand your emotions in relation to those of other people play a greater role. A lack of emotional intelligence can lead to bad investment decisions. Why? When you lack the emotional fortitude to be self-reliant, self-controlled and stay true to your strategy, it becomes easy to get swayed into bad investments because “everybody is doing it”. Patience, discipline and perspective are all more closely-tied to EQ than IQ, and these traits are extremely important when it comes to investing success.
6. Sales or Marketing: You don’t have to be a marketer to sell. We all market one thing or the other without even realizing it. It’s why we post our best pictures on social media and wear clothes that make us look good. Marketing is all about putting your best foot forward, and in a sense, that’s investing too. When it comes to asset allocation, a good, sound selection of asset classes mixed together will establish the framework for investing success. Only this time, we’re not selling to people, but to the market forces.
7. Discipline: Greed, impatience and a total lack of discipline are dangerous qualities for investors. In the game of investing, playing to emotions will thwart the most sophisticated strategy. Once you have evaluated your goals and developed a strategy, the temptation to deviate can be strong. However, you must be disciplined enough to adhere to it, regardless of what happens around. Tailoring investment decisions to suit your strategy, not your emotions, will help you reach your financial goals faster and achieve investing success.
At the end of the day, the ultimate goal of investing is attaining financial stability, securing the future and building wealth that will last for generations. With that in mind, it makes sense to check most, if not all, the boxes in the checklist of skills for successful investors.
Need more investment advice? Talk to a financial adviser on +234 (1) 270 1680 today.