Learning to invest is a skill that can provide you with incredible lifelong value. It’s not something anyone knows how to do when they first start, but with the right mindset, drive to keep learning, and commitment to see it through, even you can become a great investor.
I know it can feel intimidating at first, which is why I’m sharing a simple, yet proven, path to becoming an investor.
If you follow the Rule #1 Investing strategy, you can learn not just how to become an investor but more importantly how to build wealth that will sustain you, your family, and the generations to come.
I have seen so many people’s lives change by this strategy—mine included. So, are you ready to join our ranks?
If the answer is yes, keep reading to learn the steps to becoming a successful investor and my tips to make it happen.
How to Become an Investor in 10 Steps
How to become an investor can be broken down into 10 simple steps that anyone can do. Really. You can start right now from wherever you are.
All you need to do is follow this strategy and soon enough, you will be able to sit back and watch your money double.
You don’t have to do it alone, either.
I’ll be with you every step of the way on your journey to becoming an investor, sharing the invaluable lessons I have learned from my own journey as we go, plus the lessons I have learned from the famous investors who have gone before me.
After all, if you want to know how to be an investor—and a great one, at that—why not look to the pros?
If you’ve been following big-time investors for a while now but never put what they do into practice yourself, you’re already acting like a great investor because you’re paying attention.
Now, you just have to do as they do. Don’t worry. I’ll show you how.
1. Get the Right Investing Resources
Alright, let’s get started. Step one is getting ahold of the right investing resources.
The good and bad thing about becoming an investor is that there is no formal education required. This means the barrier to entry is low—anyone can learn this stuff, but there is no set way to go about it. As a result, there is a lot of misinformation out there.
So, you’ve got to weed through the bad to find the good.
Finding credible investing resources is key to your success as an investor, which is why I’ve created a virtual folder full of tools & resources for everyone from investors who are just starting out, like you, to advanced investors (because part of becoming an investor means you never stop learning).
Use these tools to develop a foundational understanding of investing and refer back to them when you have questions.
2. Learn Investing Basics
Once you’ve got your hands on the right resources, you can actually begin to learn the basics of investing.
There are terms you need to become familiar with, basics about the stock market you need to know, and things you need to do first before you can be an accredited investor.
Just like you need to learn the language of coding to become a developer, you have to learn the language of business to become an investor.
Follow my ultimate guide to investing to get all the basics straight before you move on to step three.
3. Ditch Bad Investing Habits
Before you arrived here today, you probably already had some preconceived notion about investing and maybe you’ve even made some investments.
Even as a novel investor, you might already have some bad habits you 1. Need to realize, and 2. Need to ditch.
Things such as investing for the short term, investing without researching what you’re investing in, and investing at the wrong time because you don’t know what’s going on in the world are all bad investing habits.
Even thoughts about investing can be bad habits, like thinking you’re going to get rich overnight or that an influencer on TikTok knows what they’re talking about.
Realize them, then ditch them, and keep reading to replace them.
4. Adopt Good Investing Habits
Just as you need to ditch bad habits, you need to adopt good habits that will help you become a successful investor, too.
For one, it is a good investing habit to read—a lot. The more you read the more you know, and the more you know, the better investments you will be able to make.
In fact, you can avoid most of the bad investing habits I mentioned above simply by reading. Read about current events, read news about companies you are interested in buying, read about things you are passionate about—whatever you read, the point is to do it.
It’s also a good idea to read about what successful investors, like Warren Buffett and Charlie Munger, are doing. Read Buffett’s annual letter to stay up to date on where he thinks the market is going and I can guarantee you’ll learn a lot.
Finally, it’s crucial to think about any potential investment as one for the long term.
The Rule #1 strategy, modeled after world-class investors like Buffett, is focused on buying companies that will be bigger and better in 10 years than they are today, which means you should want to hold onto them for that long!
To get an idea of how I have incorporated these good investing habits into my day, check this out:
5. Learn to Control Your Emotions
If you want to learn how to be an investor that builds wealth, you have to know how to control your emotions. The market moves up and down largely due to the fear and greed of emotional investors.
It’s easy to feel fearful when others are fearful so you end up selling everything.
It’s also easy to feel greedy when others are greedy and buy everything. But it’s unlikely that you’ll make money this way.
When you do the research and understand the companies you are investing in, you don’t have to rely on your emotions.
Instead, you can make wise, logical decisions that will ensure you a lot of money while everyone else is freaking out.
6. Make an Investing “Promise”
Being an investor requires a commitment to yourself. I like to call this step in the process “make a promise to yourself” because that’s how serious I want you to handle investing.
A promise to yourself means you won’t break it because then that means you’ll fail.
Investing is not something you can mess around with or just do when you feel like it. It is a long-term commitment that requires purpose and a plan.
So, determine why you are investing, and make an investment plan that you promise you will stick to.
7. Incorporate Investing Into Your Schedule
As part of your investment plan, commit to allocating 15 minutes of your week to investing.
While it may require a little more time, in the beginning, this is really all you need once you get the hang of it.
You will use this time to check in on the stock market and the companies you are considering, or are, investing in, and make changes when necessary.
You’ll be surprised at how much money you can make by only working 15 minutes a week.
8. Crave to Do More Research
Something that probably won’t fit in that 15-minute window you’ve allotted for investing each week is research. Research is an ongoing part of being a successful investor, and you should crave to do it!
Once you become an investor, you will see how rewarding it can be to learn more about your wonderful companies and the ones you want to invest in.
Warren Buffett once said, “Never lose money. Stay rational and stick to your homework when researching businesses in which to invest.”
Part of that homework is making sure you are an expert in every company you invest in and that each one lives up to the 4 Ms.
The company means something to you and aligns with your values, it has a huge moat, it has great management, and you can buy it with a huge margin of safety.
If the company you’re interested in checks off all of these boxes – you’re on the right track.
9. Master the Art of Patience
Just like homework isn’t a fun word, waiting isn’t either. If you want to become an investor, though, you have to master the art of patience.
It takes great patience to wait for the companies you have decided to invest in to go “on-sale”.
This could mean waiting for the market to drop or an event to occur, but regardless of how it occurs, what you’re waiting for is the company to hit a price that allows you to buy it with a huge margin of safety.
Remember, investing won’t make you rich overnight, but if you’re willing to wait and invest the Rule #1 way, it can make you rich.
10. Continue to Learn Investing Strategies
Successful investing is all about having a really good long-term strategy.
So, if you want to become an accredited investor, all you have to do is stay committed to learning, follow the Rule #1 strategy, and use the 4 M’s to find wonderful companies that will double your money.
It’s that simple.
If you follow these 10 steps, you’ll not only know how to become an investor but also be able to invest wisely and grow your wealth.
So, are you ready to make your first investment? My guide to Investing for Beginners will walk you through the process and boost your confidence to start your journey as an investor.
Editor’s Note: This post was updated for 2021 with additional tips on how to become a successful investor.
Phil Town is an investment advisor, hedge fund manager, 3x NY Times Best-Selling Author, ex-Grand Canyon river guide, and former Lieutenant in the US Army Special Forces. He and his wife, Melissa, share a passion for horses, polo, and eventing. Phil’s goal is to help you learn how to invest and achieve financial independence.