15 Essential Tips to Become a Full-Time Investor

Key Takeaways

• Success in full-time investing requires emotional resilience so as to handle stress and market volatility while maintaining disciplined decision-making.

• Rather than chasing every opportunity, successful full-time investors master their chosen niche first, develop a clear sell discipline, and resist the urge to expand their investment scope prematurely.

• Full-time investing requires ongoing education, adaptation to market changes, and strict risk management.

Thinking about becoming a full-time investor? It’s not as far-fetched as it might have been twenty years ago. What’s more, investment opportunities abound, whether you’re into the stock market or considering alternative asset classes such as art, real estate and collectibles. 

Even better, technology has helped reduce the barriers to entry for would-be investors. Witness what’s happening in the art world, where technological innovations have changed the way art is bought and sold. Advances in online marketplaces have also opened opportunities for real estate investors and crowdfunding opportunities. No longer are in-person meetings necessary between brokers and potential buyers, and you can view a roster of properties without ever leaving your sofa. 

Further, platforms such as Willow Wealth are now providing access to investment products that were formerly open only to institutions and qualified purchasers. Nowadays, it’s a whole new investment world. Still, committing yourself to investing full time is more than a notion.  

The Pros and Cons of Becoming a Full-Time Investor

As with most anything else, there are many factors to consider before investing full time, including the risks. After all, you’d be walking away from a steady income and benefits. Making the transition from a conventional job to full-time investor is a huge decision. It’s something that should be done with a solid business plan and lots of deliberation. 

Considering these pros and cons will help you decide if it’s really for you too.

PROS

• Flexibility. You’ll no longer have the structure and rigidities that come with a traditional full-time job. As a full-time investor, you can learn about your market and conduct investment business whenever you want.  It all depends on your circumstances and goals.
• Independence. You get to be your own boss — if management of your own activities is important to you. Perhaps you relish working from home and look forward to building your career at your own pace.
• A better work and life balance. Because you set your own schedule , you can better fit your work life around your family and close friends, and spend more time doing the things you like to do. 
• Financial independence. As with any sole proprietorship, you get to determine your income. Indeed, you can make as much money as you want, if you’re willing to put in the time and gain the expertise you’ll need to be successful.  
• Continuous attainment of knowledge. It’s common for people to have jobs that no longer stimulate them, often because their roles and responsibilities are limited. But with full-time investing, you’re constantly learning, which is both stimulating and has the potential to expose you to even more investment opportunities.
• Portfolio optimization opportunities. As you have more time to analyze markets, you can identify sophisticated investment strategies and find correlation patterns that part-time investors might miss.

CONS

• Stress. There’s no way around it: investing involves risk and risk can cause stress. You need to be able to handle it. You must also learn to manage the fear that can come with full-time investing. Emotion can render you unable to make strategic moves, so you’ll need to learn to take the ebbs and flows as part of the way the business works.
• Loss of regular income and health insurance. There’s something to be said for knowing when money is coming in, and how much it will be. That’s why, before you commit, it’s imperative to have a budget in place, along with ample savings and a business plan.  
• Finding your niche takes time. It’s important to have a solid foundation before making the jump to full-time investor. You’ll want to narrow your investment focus and immerse yourself in learning. Once you’ve developed the necessary skills and acumen to be an investor, you can try another niche.
• Possible burnout. Because you will no longer have the 9 to 5 structure your job provides, you will find yourself with a lot of time on your hands. While that could be a positive, the tendency is to work, work, work, and neglect other areas of life. Try to break up your days or weeks with dedicated time for learning, thinking, engaging in a hobby and spending time with friends and loved ones.
• Isolation. You’ll pretty much be working alone, which can be jarring if you’re used to, and need, regular interaction with others. It depends on your personality. Joining a local network of other full-time investors can fulfill this need, while giving you access to more experienced investment managers.
• Market dependence. Your income is directly tied to market conditions, which can be unpredictable and cyclical. During extended market downturns or low-volatility periods, it may be difficult to generate consistent returns.

Valuable Tips for Becoming a Full-Time Investor

With all of that said, here are some tips for prospective full-time investors:

1. Give Yourself a Reality Check: Is Full-Time Investing for You?

As we’ve mentioned, you must be able to deal with the stress that is part of any investing, let alone full-time. You must have the stomach for all the highs, lows, and uncertainties that come with the territory. Ask yourself whether you have the psychological strength to deal with volatility and the patience to sit pat to avoid rash decisions.

You must also assess whether you can deal with bouts of boredom and loneliness. Investing may be romanticized as non-stop excitement, but oftentimes there’s not a lot going on. What’s more, you’re in this all by yourself.

You also must have good analytical skills. That means the ability to understand basic business precepts, including financial statements. You also need solid informational skills. 

2. Stay Passionate About Investing

Passion and drive are required for full-time investing. Sure, you may have the potential to make a lot of money, but you should also love what you do. If so, and you’re good at it, money will find you. And by the way, that passion should extend to the nuts and bolts of investing, including research and analysis.

One thing’s for sure: if you’re leaving your job merely to have a more flexible work schedule or to be your own boss, that’s fine. But you also need to make sure full time investing and the necessary research that accompanies it is right for you.

3. Find Your Strategy

Investment styles can vary, so it’s important to develop an approach with which you’re comfortable. One way to do this is reading books about investing theory that will help you identify your strengths as well as where you need to learn more.

You can also figure out your strategy and gain an investing advantage by investigating companies through resources such as quarterly and annual reports, SEC filings and conference call transcripts. 

It’s important to take some time and figure all of this out before you dive in.  It’s more beneficial to develop your strategy first to avoid the problems that can come along with jumping in too soon.

4. Stay Focused

Once you figure out where you want to invest, stay with it, and keep getting better. The key here will be beating back the temptation to shift gears when you hear about opportunities that aren’t in your lane. Remember, everyone should have a strategy of their own, tailored to their particular set of circumstances. What’s good for someone else might not be for you. There will come a time when you’ve gained the confidence to experiment. But early on, remain super focused on your investment calling, get it down pat, then look around to see what’s next.  

5. Keep Things Simple and Convenient

There are many differerent investment opportunities, and once you decide on a strategy, you must whittle that down, too. Say you’re interested in real estate. You must decide whether your focus will be residential, commercial, industrial, development, or some combination of all of the above. If you’re interested in art as investments, you need to nail down what you’re looking for. Simplifying the process – making things more efficient – will help you learn the ropes more quickly. This will then open more potential avenues down the line.

6. Start With a Test Run

Before working with cash, do some trial runs to see where you need to learn more – without incurring the risk factor. Try to stick as much as possible to your investment strategy to simulate real life and stay away from risks you wouldn’t take.

Take investing one day at a time and educate yourself at a pace that works for you in order to enhance your skills. One of the first things full-time investors notice is the amount of free time they suddenly have at their disposal. Use that time to work on honing your investment knowledge and skills.

Find a network of like-minded people and ask questions. There’s a lot of information you must attain, but if you hang in there, the dots should start to connect.

7. Define Your Sell Discipline

The lack of a sell discipline is a common issue among fledgling full-time investors. Is your investment strategy defined by value or time? Try to avoid momentary lapses in judgment here. And while you’re at it, be certain to adjust your sell-discipline to your lifestyle, since your income will hinge on short-term and very unpredictable cash flows. The key here is to do everything you can to eliminate emotion from your decision-making process. As we mentioned before, succumbing to fear can push you into making bad decisions. Learn to keep it in check.  

8. Avoid Investing on Margin

Would-be full-time investors should spend the early years of their nascent careers building a cash supply for when things get shaky. You don’t want to get forced into a situation in which you have to liquidate assets to raise cash.

Along those same lines, take some time to get well and truly seasoned before you consider investing on margin. In the process you might discover you don’t need to do so at all. Yes, there are times when it can get you into something good that might be just a bit beyond your reach. Just make sure you’ve done the due diligence to be certain the risk is properly managed. 

9. Automate Your Process   

Your time is valuable, so conserve it by looking for things that you can automate. The idea is to conserve time and energy for things that are most important. That may mean outsourcing the boring, tedious stuff. You’ll get a lot more done when you have help staying atop the little day-to-day things.

With that in mind, you must also decide how your business will be legally structured. This will depend on your tax situation, your costs of doing business, the level of risk to which you’re open and the volume of paperwork with which you’re willing to wrestle on your own. You may need to consult with an attorney and/or tax professional to guide you on this front.

10. Always Keep Learning

As we’ve mentioned, part of the reason you may want to leave your job in the first place is you’re no longer learning because the scope of your role is so limited. That will never be the case with full-time investing. Or at least it shouldn’t be. Some things you’ll pick up quickly, others you’ll grasp more slowly. Either way, the point is to avoid stagnancy, a state that investors can ill afford. You may even want to dedicate certain days of the week to specific areas of study.

11. Mind Your Work-Life Balance

You’re going to need to lean on your family for support early on and during tough times, so you’d do well to have a healthy work-life balance. All that extra time and lack of work structure that we talked about? Use it to your advantage by deliberately carving out time for your family and friends and other things you enjoy. Doing so will give you the refueling you need to transact business in a more positive state of mind.

12. Diversify Your Investments

It’s well known that diversification – directing investments across various industries – is a key to attaining your long-range financial objectives and can help mitigate risk. That’s especially relevant if your investments are subject to the ups and downs of the stock market. It’s also why some investors are turning to alternative investment classes such as art and real estate to diversify their portfolios. 

Alternative investments may help smooth out the effect of the market’s ups and downs.  Willow Wealth can get you going today with a curated selection of alternative investment opportunities, once available only to institutions and the ultra wealthy, that may help diversify your portfolio.

13. Build a Media Detox Routine

The data that you’re dealing with may be overwhelming at times. It’s always useful to set up structured periods where you completely disconnect from financial news and market updates. In this way you will prevent information overload and, what is more, be able to maintain clearer decision-making.

14. Schedule “Ghost Trading” Days

What’s a ghost trading day? It’s when you make all decisions but don’t execute any trades. This technique helps you review these theoretical positions some time later and identify emotional biases in your investing strategy (and correct them).

15. Build a “Black Swan” Fund

Here comes another technique that you can try during your investing journey. Be ready for black swans! Well, a “black swan” event is an extremely rare, unpredictable occurrence with severe and widespread impact. In financial markets, these are events that go well beyond what is normally expected, and are nearly impossible to predict with standard tools.

To be ready for a black swan event, set aside capital specifically for capitalizing on rare market events that other investors avoid: like buying during abrupt declines or major market corrections.

Conclusion

If you plan to embark on the journey of becoming a full-time investor, spend some time preparing yourself before taking the plunge. Assess your psychological strength, analytical skills, and passion for investing. Work on a well-defined investment strategy and stay focused on the path that you’ve chosen. At the same time, allow some room for testing your strategies, but avoid excessive risk-taking. Learn continuously and maintain a healthy work-life balance so that your new journey is enjoyable and successful.