Stock Investing: One of the Best Life Coaches

Do you know what qualities make an investor successful? And does an investor need to have the brain of a top physicist? No, they don’t. What’s far more important is mastering human weaknesses like fear, greed, impatience, and the tendency to give up after a loss. An important trait is also the ability to accept your mistakes and learn from them.

The stock market offers no compassion, and only the strongest prevail. However, the markets can also be an excellent life coach. It doesn’t require a salary for its lessons, but at its best, it can bring money back in the form of dividends and capital gains. The stock market has a lot to offer—if you know how to use it effectively.

The basic requirement for success in the stock market is to control your emotions and strictly follow a proven investment strategy. Discipline is a valuable asset in the market. An investment strategy consists of clear rules: how much cash to hold at different stages of the market, what types of companies to buy, how much to buy at once, when to sell, and how to diversify risk.

There’s no single "right" investment strategy. It evolves according to your life situation and personality—especially your willingness to take and endure risk. And here’s an important key to success: you should only invest money that you don’t need in case of an emergency. Once you have this mindset, fear won’t creep into your mind even if prices suddenly drop. In this case, you simply wait patiently for prices to return to normal. And if you’ve kept some cash, as the strategy suggests, you’ll rejoice in the market downturns and buy good stocks at a discount.

By the way, did you know that the stock market is the only market where customers run away in panic when a merchant announces a sale? This is one of the peculiarities of these moments that makes stock investing so fascinating—and at the same time, so educational.

We will continue the “life coaching” lesson in the next section.

The original Finnish column text is available in the digital version of Salonjokilaakso, on page 15.