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5 steps for beginner investors to a successful investment journey

Updated: Jan 26, 2023

Investment should be a habit and not just something you postpone over and over again to do later in your life.

Time flies and you have to make the most of it. Here’s a famous Chinese proverb, “The best time to plant a tree was 20 years ago. The second best time is now”.

According to an article on, more than half of Americans own stocks:

Americans own stocks

That is actually very encouraging and shall make you feel more confident to join the club.

You got the idea, so let’s get ahead with everything you would need to start a successful investment journey.


STEP 1. Define your risk appetite

The stock market is risky.

You have to make sure that the amount of money you are willing to risk is what you can afford to lose or hold locked for a long period of time.

If you are someone in your 20s then you can take a higher amount of risk. You can allocate 50-80% of your savings to the market (depending on how aggressive you are). However, if you are a retired person, then 20-30% allocation would be considered wise. This is not a hard and fast rule, but you must measure your risk appetite before investing.

One hint is that you do not need to invest a big sum of money at once. You can rather invest small portions consistently, on a monthly basis for example.

This principle is known as Dollar Cost Averaging. In the article under the link, there is a nice explanation on how this technique can reduce volatility and make you sleep better.

In technical terms, risk is often seen as Volatility, also known as Standard Deviation, which describes a stock behavior. The higher the volatility, the more the stock is swinging from day to day.

Let's do a mental exercise. Which stock you think is more volatile, Tesla or Apple?

I am sure you guessed it right. Here is the comparison of the 2 stocks. The chart speaks for itself.

Apple Tesla AAPL TSLA stock volatility

I know, that generates different impressions and thoughts. On one hand Tesla has significantly overperformed Apple, but on the other hand, what a roller coaster that was!

Once again, it is up to you to evaluate your risk appetite and risk tolerance.


STEP 2. Educate yourself

You need to learn the basics of the stock market. Depending solely on the suggestions of Youtubers or financial experts will certainly backfire.

There are a lot of courses, books and blogs like this one ( please Subscribe 😊 ) to help you in your investment journey. Be familiar with how market works, building your portfolio, diversification, and finding and evaluating the stocks.

Don't be lazy and don't try to chase for fast tips. Take the time and read some books. Even if you feel it takes too long, that time is actually needed to your brain to process the information and this is how it gets trained.

I can recommend you top 5 books which I have read by myself and found them extremely useful:

The Richest Man in Babylon – will help you to develop the necessary mindset for saving and investing. If you leave from paycheck to paycheck, that's the right book for you.

A Random Walk Down Wall Street – will make you aware about stock market speculative bubbles and will also present you different investing strategies, principles and situations.

Rich Dad Poor Dad – although it is not directly about investing in the stock market, it drives on your entrepreneurial mindset. Start thinking like rich people do.

Learn To Earn - brings to light mind-blowing facts you never knew would make you richer.

The 4-Hour Workweek - will remind you that the life is not only about money. If you make money by investing, that money is making sense only if you have the time to spend it. Business automation is one of the key things in this book.

Regardless if you follow my advice to read these, the most important thing is that you keep investing in your knowledge consistently and systematically.

An Investment in knowledge pays the best interest

STEP 3. Develop Patience

Patience is one common trait you will find on all successful investors. Investing is a long-term game, you have to be patient and let the magic happen.

Once you see your profit scaling, there is a temptation to cash it out but guess what, you would be losing a considerable amount of money if you would have otherwise held longer.

Again, there is a fancy name for this concept as well. It is called Compounding. In simple words they money your earned from you initial investment will earn additional money in their turn.

It's like a snowball effect ❄️

If a picture says a Thousand words, a video says a Million. So here is a perfect video which explains how compounding works and why 10 + 10 = 21.


STEP 4. Be in control of your emotions

Every investor faced a wrong decision at least once, and most often that is driven by emotions.

Meet the FEAR

Imagine when you find that perfect stock, implement your strategies and finally decide to bet on it. Then the stock starts to decline and you feel anxious about it.

The negative percentage written in red on your screen drives you crazy and after three days you decide to sell in order to avoid further losses.

Guess what happens next?!

FED starts to pump trillion of dollars into the economy and the market rebounds. Furthermore, the market closes the year on record heights. That is what happened in 2020, when Coronavirus came.

S&P500 Chart

Fear and anxiety made you close in red and take the losses.

Meet the GREED

Due to pandemic lockdown in 2020, Zoom Video Communications was booming. Everybody was talking about it.

The rationality was telling that this cannot last forever, as the stock price was trading at unbelievable P/E ratios.

Those prices had no justification other that the investors' sentiment. It was like watching a horse race.

Now imagine you could not resist the temptation and finally gave up rationality towards greed, and bought some shares in October 2020, in an attempt to join this crazy ride.

The picture below clearly illustrates what happened next:

ZOOM chart

In the end, if you want to take away just one thing from this section, it would be this: “Successful investors overcome fear and greed while the amateur ones make their decision based on them”.


STEP 5. Choose a strategy

You will have to choose a strategy and be familiar with it. At the start, it’s better to focus on one strategy and be really good at it.

There are a few long-term investment strategies that suit most investors. Some common ones are value investing, dividend investing, momentum strategy, dollar-cost averaging.

It is difficult to build a strategy when you do not have yet investing experience. But once you study this awesome world of stock market, you will be able to figure out what fits best for you.

A combination of a good strategy and a bit of patience will certainly reward you in a long term.

Remember: The worst strategy is to have no strategy!



You will lose money, make bad decisions, act on your fear and greed but learn from your mistakes and get going. Most people quit and believe that the market is a scam and it’s almost impossible to make money out of it. That is not true.

Don't get discouraged and learn the most out of your mistakes.

Choose to be on the winning side and as time goes by, you will have a pleasure to see your wealth growing day by day.

Now I challenge you to describe the best situation when you were able to overpass the emotions and that paid out in the end. Use the comment section, this is what it was invented for!

That being said, I will you all to have a successful investment journey!

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