Retail investors must read: How to learn from top investors' strategies for steady profits?

Since the Federal Reserve started cutting interest rates, market sentiment has been high. Recently, with the U.S. election day approaching, the "Trump trade" has continued to heat up, and assets such as U.S. stocks, foreign exchange, and cryptocurrencies have shown strong wealth effects. However, financial market volatility is unpredictable, and many investors have repeatedly been frustrated in the "buy high, sell low" cycle. In fact, by learning from the successful principles of top investors, retail investors can gradually build an efficient long-term investment strategy to avoid losses and achieve stable returns.

1. Clarify Investment Goals and Targets

Before starting to invest, it is crucial to clarify your target return rate and expected holding period. Choose suitable investment targets based on these goals. For young people just entering the workforce with limited funds, it is advisable to prioritize low-risk, steadily appreciating asset types such as gold, bonds, and indices. If you seek high returns and can tolerate higher risks, you may focus on stocks, crypto assets, and foreign exchange, which are more volatile.

2. Develop a Reasonable Capital Allocation Plan

Good capital management is the cornerstone of investment success. Once you enter the market and purchase assets, their value will begin to fluctuate with market prices. Invest only what you can afford to lose, avoiding excessive positions or high-leverage operations that can cause psychological stress. It is generally recommended to follow the "631 rule" or "541 rule," allocating funds in a ratio of 6:3:1 or 5:4:1 among daily expenses, savings, and risk investments. By ensuring stable living conditions, using idle funds for investment can effectively reduce the impact of market fluctuations on your life.

3. Diversify Investments to Reduce Risk

"Don't put all your eggs in one basket" is an important principle in investing. Diversifying investments not only reduces risk but also increases the potential for returns. By allocating assets across different categories, regions, and industries such as stocks, foreign exchange, and commodities, investors can mitigate the impact of fluctuations in a single market or industry. Financial markets do not all rise or fall at the same time. For example, when the stock market declines, safe-haven assets like gold may perform strongly, and a diversified portfolio can effectively hedge against the volatility risk of a single market.

Comparison of annual performance of major global asset classes over the past decade

4. Invest Regularly and Consistently to Smooth Costs

Regular and fixed-amount investments to buy low and sell high is the ultimate goal for all investors. However, market changes are unpredictable, and predicting tops and bottoms is extremely challenging. Regular and fixed-amount investing is an ideal strategy for steady long-term investment. Regardless of market fluctuations, investing a fixed amount at regular intervals allows you to buy more units at lower prices and fewer units at higher prices, smoothing overall investment costs and reducing reliance on market timing. Over time, as the market recovers, assets may exhibit exponential growth. For instance, investing $1,000 monthly is better for risk diversification than a one-time investment of $12,000, while also offering more substantial potential returns.

Comparison of regular investment versus one-time investment

5. Manage Expectations Well Market fluctuations are unpredictable, and profitable or losing positions may lead to emotional investing, causing you to deviate from your investment plan. Market volatility is to be expected; understanding the volatility of different risk-level assets and managing expectations can help you plan in advance how to respond to various situations, avoiding a gambling mentality. For example, as the world holds its breath for the U.S. election, different candidates' policy proposals will have varying impacts on different financial assets. Preparing in advance can prevent you from being caught off guard and making hasty decisions during market downturns.

6. Avoid Being Influenced by Short-Term News

Market news is frequent and emotional, with sensational headlines and negative reports making situations more unsettling. Do not panic due to short-term negative news; focus on the fundamentals of the company/project. Historical records show that short-term fluctuations can occur at any time but do not hinder long-term market growth, which tends to rebound significantly after severe setbacks.

The S&P 500 index's pullbacks and trends over the past decade

7. Long-Term Investment Can Increase Positive Return Opportunities

From a short-term perspective, risk assets such as stocks, indices, and Bitcoin carry greater risks compared to fixed-income assets like bonds. However, from a long-term perspective, as the holding period extends, they almost become "risk-free" assets. Historical records also indicate that while financial markets may experience short-term fluctuations, they generally trend upward in the long run. Although the way the market recovers is not fixed, long-term investments in good company stocks/tokens often have higher return potential. In short, the safety and potential returns of investments become more apparent with long-term holding, as the saying goes, "long-term is gold."

8. Summarize Experiences and Keep Learning

Investing is not an overnight success; reviewing and learning are essential for sustained success. After each trade, investors should reflect on their gains and losses in decision-making. For instance, some people always get stuck in positions due to chasing prices or miss market opportunities due to panic selling. By summarizing these lessons, investors can make more rational decisions in similar situations in the future. Additionally, the financial market and investment environment are constantly changing, so regularly reviewing and adjusting investment plans is necessary. Continuously tracking new market trends, combining fundamental analysis, and updating investment knowledge and skills ensure that your investment targets still align with your financial goals.

Successful investing relies not on short-term luck but on long-term planning, good capital management, and continuous learning. Moreover, as market volatility is difficult to predict, a diversified investment strategy is needed to spread risk. As a global partner of the Argentina national team, 4E provides a one-stop trading platform covering over 600 assets, including cryptocurrencies, U.S. stocks, indices, foreign exchange, and commodities, and has launched a beginner simulation account to help everyone get started easily. If you are interested in investing, feel free to visit eeee.com to experience the convenience and security of professional trading.