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Determination: The Most Important Factor in Successful Investing

By Selena Maranjian – Jun 21, 2020 at 2:11PM

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With determination, your investing aspirations are likely to succeed.

The Cambridge Dictionary defines determination as "the ability to continue trying to do something, although it is very difficult." It's an attribute that can take us far in our lives and in our investing.

Indeed, determination is arguably the most important factor in successful investing. Here are three kinds of determination that can help make you wealthy.

A young smiling white man in a blue plaid shirt holds a bunch of hundred dollar bills fanned out in one hand while giving a thumbs-up sign with the other.

Image source: Getty Images.

1. Determination to invest regularly

Great investing takes patience. You have to wait for the fat pitches, as Warren Buffett has explained -- the relatively rare outstanding opportunities in which the stock of a terrific company is significantly undervalued.

You also have to keep investing regularly. That might mean adding, say, $1,000 to your brokerage account every month, or contributing $5,000 to it every quarter -- or perhaps just $250 every pay period. Doing it regularly, no matter how much or how little you can afford to invest, is important. If you can increase the sums you invest from year to year, that's a powerful wealth-building strategy, too. The table below shows how much you might amass if you sock away various sums regularly over long periods:

Growing at 8% for

$5,000 invested annually

$10,000 invested annually

$15,000 invested annually

5 years

$31,680

$63,359

$95,039

10 years

$78,227

$156,455

$234,682

15 years

$146,621

$293,243

$439,864

20 years

$247,115

$494,229

$741,344

25 years

$394,772

$789,544

$1,184,316

30 years

$611,729

$1,223,459

$1,835,188

35 years

$930,511

$1,861,021

$2,791,532

40 years

$1,398,905

$2,797,810

$4,196,716

Source: Calculations by author.

You simply need to stay focused on your ultimate goals, which might be getting rich, building a financially secure future, and/or maybe retiring early. You won't see amazing results immediately, though you might get lucky and have a few stocks soar in your first year of holding them. But after 10, 20, or more years, you'll likely be amazed at what you've achieved.

2. Determination to sacrifice

Next, if you want to amass a large sum, you'll have to be determined to be aggressive about it. That doesn't mean loading up on lottery tickets, chasing hot stock tips, investing with borrowed money, or buying gobs of penny stocks. Those are great ways to lose money, not grow it.

Instead, determine to live below your means and avoid getting mired in high interest rate debt. Only buy what you can afford, and contribute to your savings and investments before you splurge on luxuries. For best results, you might want to sacrifice a little. Instead of getting that fancy 85" television you're drooling over, get a still-impressive 75" one, and invest the difference. Come up with ways to spend less, perhaps by cancelling your cable TV and switching to one or two streaming services, or by increasing the deductible on your insurance policies.

For even more wealth building, look into ways to bring in more money -- such as by taking on a side gig. You might sell stock photographs online, tutor kids, or sell crafts at farmers' markets. Rent a room in your house or your whole home now and then, drive for a ride-sharing service, or deliver food for a restaurant.

3. Determination to keep learning

Finally, be determined to keep learning. You need to learn how to invest effectively to begin with, but keep reading about investing and great investors to hone your craft. Learn from your mistakes to avoid repeating them. Common investing mistakes include selling too soon, buying into companies you don't understand, and buying more of a failing company. You can choose to invest the super-easy way, too, by sticking with index funds, which tend to be strong performers over the long term.

If you're truly determined to be a successful investor, the odds are very much in your favor. It just takes time, effort, and determination.

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