To be successful when it comes to your investments, there are a few intangibles you need. Regardless of your end goals, the pathway to success is the same, and the process is repeatable. It requires self-discipline, hard work, and dedication, but the results make it all worth it.
Without these intangibles, it will be very hard to be successful. It may seem like some things aren’t necessary for you, but they will all be relevant to each investor at some point, so preparing ahead of time will give you the best possible chance at success.
Patience
The first thing that every investor needs regardless of age, risk tolerance, or strategy is patience. Patience is extremely important because being impatient will always lead to poor decision making.
Whether it’s having the patience for a stock you hold to perform how you expected it, or patience to wait for a buy candidate to reach a certain level. Whenever patience is needed, if it’s not expressed, it will inevitably lead to problems.
Have a plan
One of the best ways for investors to display patience and self-discipline is to have a plan. Although, having a plan is much more important than just solving the problem of being impatient, it’s extremely important to set the basis for your portfolio’s lifetime.
It’s paramount for all investors to have a plan when it comes to your investing accounts as well as your personal spending accounts, since they will most likely intersect.
Knowing how much money you may need to spend in the next couple of years, having adequate emergency money, and having a plan for liquidity are all important things to think about first.
From there, deciding on your strategy, risk tolerance, and investing preferences comes next, so you can decide how you are going to shape your portfolio. Only then should you begin to select the securities you wish to add to your portfolio.
It’s important to remember the plan can and should be updated when pertinent. Whether it has been a while and things have changed or something big happens at once, go into your plan and change it when it needs updating, then implement that into your portfolio.
The right mix of stocks
Once you have built your investment plan, it’s important to build your portfolio with the right stocks. Knowing your investing timeline, preferences and risk tolerance are all very key. You should also know how much fixed income you require and make sure the portfolio has adequate diversity.
One stock that would be perfect for all portfolios is Peyto Exploration and Development (TSX:PEY). Peyto is a top stock that would fit the portfolios of value investors, growth investors, and income investors.
It currently trades at a trailing 12-month price-to-earnings multiple of just three times. Its price to book is only 0.3 times, and its price to cash flow is just 1.2 times.
From a growth standpoint, the company has huge potential once the market for natural gas has rebounded. Peyto has managed its assets for the long term and has virtually shut down production all together until prices recover. Once they do, Peyto will be able to turn on the taps and rapidly increase its production, sending the stock back where it came from five years ago at around ~$40.
For income investors, the company pays a $0.02 monthly dividend that currently yields nearly 8%. In addition, similar to the growth, as the prices for natural gas rise, and the company produces more, it will inevitably increase the dividend. Five years ago, the dividend was $0.11 a month, so there is no reason why it can’t go back when prices rebound.
As well as adding top stocks such as Peyto to your portfolio, it’s also important to make sure you aren’t holding stocks that will severely impact your portfolio’s performance in the future.
