An investor is a person who puts his or her money on different places (e.g. stock exchange, real estate, or precious metals) in order to make a return. Becoming an investor makes it possible to use these returns to create a significant income , and even eventually, to live without working anymore through dividends and rents collected. However, becoming a good investor is definitely not an easy thing to do. You have to be knowledgeable of the economy and above all, to know and seize opportunities when they come forward. In this article we will give some key explaining about how to become a good investor.

What you will learn here:

• The difference between an investor and a speculator
• 5 good reasons to become an investor
• 6 tips to become a successful investor

What is an investor and what differs from a speculator?

An investor is someone who places capital in the hope of getting a return. Everyone can by definition become an investor, but there are differences in size between an amateur and a professional. A good investor is someone who takes a minimal risk in the hope of getting a maximum return. He knows how to recognize good opportunities and seize them.

Two main factors differ the investor from the speculator: the time horizon and the level of risk. An investor typically has a longer time horizon than the speculator. It seeks to place its money in the long run in solid projects and companies, and to limit its risk. A speculator generally seeks to make a quick profit by taking high risks. ... 

I am often asked a seemingly simple question but to the complex answer: “How do you know where to place your money?”

The answer being variable depending on the period of time you read this article (just as the answer is variable every time I ask the question), and knowing where to place his money is a useful skill in all circumstances, I would like to discuss Here in detail the basics to know and the criteria to be considered in making a smart investment decision.

In the first part we will detail the main investment choices accessible to individuals, and in the second part we will talk about the macroeconomic factors to consider in order to know where to place his money intelligently.

Where to put your money: available options

If you immediately put aside all the doubtful investments (i.e. unreliable, very speculative including binary options, Forex and pretty much all ads you can receive in your Inbox for “miracle Investments”), you have following 4 options, liquid and existing for centuries:

Stocks:  Should we still introduce them? This is the kind of asset that has historically offered the best returns. This comes at the cost of a high volatility, i.e. you have to have a strong stomach to deal with the violent fluctuations of the value of your securities (or have a good strategy). That said if you can tolerate this, you will be rewarded with big returns. ... 

“My wealth has come from a combination of living in America, some lucky  genes, and compound interest.” – Warren Buffet

In 2010, a former American secretary named Grace Groner died at the age of 100 years old leaving behind a fortune of $7 million. At the time of her death, everyone was surprised that a woman with such a modest lifestyle was able to accumulate such a fortune. So we investigated the origins of her wealth.

It turned out that the source of Madame Groner’s $7 million was actually… 3 Abbot Laboratories shares purchased in 1935 for the sum of 180 dollars. In 2010, Madame Groner’s initial 180 dollars had changed to $7 million. How is that possible? Through the magic of compound interest.

What is compound interest?

Compound interest is the systematic reinvestment of interest earned on its capital so that it multiplies faster. For example: Suppose you invest $1000 at the rate of 10%:

• If you use a simple interest rate, each year you earn 10% of $1000, or $100 year 1, $100 year 2, $100 year 3 and so on.
• If you use a compound interest rate, each year you earn 10% of the sum + the interest of the previous year, either $100 year 1, $110 year 2 (10% x (1000 + 100)), $121 year 3 (10% x (1100 + 110)), $133 year 4 (10% x (1210 + 121)) and so on.

While simple interest multiply the initial capital in a linear (so slow) way, compound interest multiplies it exponentially, because you are getting interest on interest. And even though the few dollars earned in addition to the first years may seem weak, this creates a huge snowball effect in the long term. ... 

I often mentioned on this site of stock strategies based on performance and dividends. Because it is the investment method that I have personally chosen, that I know it works, and that it is relatively simple to implement. That said this method is not the only one that can earn long-term returns above the average.

However, solid, profitable and time-tested stock strategies are not as many as we think: In my opinion, there are only five of them robust enough and sufficiently tested by serious academic research to be worthy of interest. Without further delay, here is a guide to the 5 best strategies for investing in the stock market.

What you will learn in this article:

• A very simple strategy that makes it possible to beat 90% of the players in the stock markets
• More complex strategies with annual returns of 25 to 30% per year
• The difference between an active strategy and a passive strategy
• The Pros, Cons and detailed performance of each strategy

The best passive strategies for investing in the stock market

Passive strategies consist of simply investing in stock market indices (such as S&P500, Dow Jones), they are said to be “passive” because they do not seek to do better than the indices, only to replicate them as more accurate as possible. These strategies have the advantage of being very little time-consuming, and you will not need a great knowledge of the stock markets to be effective. ... 

I have posted since the creation of the site a number of articles dealing with stock market strategy but no detailed tutorial explaining how to start the stock market from scratch, I must believe that I like to do things in disorder.

The question “Where to start?” I was very often asked by the new readers of the site (and also by some regular visitors who decided to take action), I decided to write a detailed guide that will allow you to get started on a good basis.

A good start on the stock market goes through several steps that we will detail here point by point:

1. Choosing the right broker (and avoid the No.1 performance killer on the Stock exchange: Fees)
2. Knowing how to place a stock order (and know the different types of orders)
3. Diversifying the amounts to be invested (always diversify your investments)
4. Choosing a suitable stock investing strategy (forget Day-trading)
5. Acquiring the knowledge necessary to succeed (do not go blind)
6. Knowing how to manage your emotions (a key factor often underestimated)

Step 1: Choosing the right broker

There are many stock brokers available on the market but not all of them are equal. The factor you need to monitor as a priority for your broker’s choice is the fee.

If only 1 or 2% of the fees collected systematically on your trading transactions will drastically decrease your long-term performance because they insidiously hinder the process of Compound Interest year after year.

A graphic example: Here are $10,000  placed over 20 years at the historical average rate of stock markets (without fees): ...