13 Ways to Become a Strong Modern-Day Investor

Investing today is different than at any time in the past. There are new asset classes to consider that didn't exist before. And it's easier than ever to get started investing with little money, thanks to discount brokers offering no-minimum-balance accounts and no commission fees.

The changing landscape of investing has provided the modern-day investor with both new opportunities and new challenges. But if you follow these 13 tips, you should become a strong investor with a good chance at building a solid portfolio.

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Although a lot has changed in the world of investing, the importance of a sound investing strategy remains the same.

It's crucial to understand what your goals are for investing, what kind of investor you want to be, how you plan to build a diversified portfolio, and what criteria you'll use to evaluate investments.

Don't even think about putting money into the market until you have an answer to all of those questions.

ALSO READ: How to Research Stocks

Investing with the hopes of chasing short-term profits has become more popular as a number of new brokers seek to gamify investing.

Unfortunately, this strategy is unlikely to pay off over the long term and it significantly increases the risk of suffering losses.

If you want to be a strong investor, you'll stick with what's always worked -- making sound investments that you hope to hold for the long term.

Investors have different levels of risk tolerance based on their comfort level with seeking losses on paper, as well as their investing timeline.

It's important to understand going in how comfortable you are with risk -- especially since investing apps have made it so easy to stay constantly abreast of economic news and to panic sell at the first sign of trouble.

Choosing investments based on your risk tolerance will both reduce the likelihood of big losses and help you to stay the course during troubled times.

One key way to reduce the risk of investing is to spread your money around into lots of different assets. If you buy many types of investments, there's a better chance at least some of them will perform well.

You can diversify by selecting a broad mix of individual investments on your own. But the modern-day investor also has some easy, affordable options that provide instant diversification thanks to a growing number of exchange-traded funds (ETFs) tracking broad market indexes or specific investment niches.

If you want to make investing simple and diversification virtually automatic, ETFs could be the way to go.

5 Winning Stocks Under $49
We hear it over and over from investors, “I wish I had bought Amazon or Netflix when they were first recommended by the Motley Fool. I’d be sitting on a gold mine!” And it’s true. And while Amazon and Netflix have had a good run, we think these 5 other stocks are screaming buys. And you can buy them now for less than $49 a share! Simply click here to learn how to get your copy of “5 Growth Stocks Under $49” for FREE for a limited time only.

Social media and online forums have created a new phenomenon called the meme stock.

Essentially, a specific stock gets a lot of buzz on social media, driving up the price so much it becomes divorced from the underlying value of the company. GameStop is the best-known example of this.

While it can be tempting to jump on the bandwagon and buy these meme stocks, especially if you see other people getting rich off them, the reality is that this is a high-risk play that could end up leading to big losses. Smart investors should avoid this.

ALSO READ: Don't Ignore GameStop's Crazy Valuation, But Its Business Is Getting Better

The modern-day investor has a broader choice of brokers than ever. There are apps, online websites with full-featured trading platforms, and some brokers that offer both.

Most brokerage firms also have eliminated commissions and minimum balance requirements, so anyone can start investing affordably.

The trick is to find one with low fees and a platform you feel comfortable using.

Today, you have more options for investments than ever. From stocks and bonds to cryptocurrencies to ETFs to robo-advisors that invest your money for you, there's a wealth of opportunities to put your money to work.

Research the different options available so you can decide what assets deserve a place in your portfolio.

Fractional shares are also a newer offering from many brokerage firms, and they're changing the game for today's investors.

Fractional shares allow you to buy partial shares of stocks. If you have $100 but you want to invest in a company with shares priced at $1,000, you can buy one-tenth of a share.

Thanks to fractional shares, the size of your pocketbook no longer has to dictate your investing strategy. There's no reason not to take advantage of the opportunity to buy into companies by deciding how much money you want to bet on them versus how many shares you want to buy.

ALSO READ: How to Buy Stocks When You're Scared of the Market

Dollar-cost averaging is a great way to invest without trying to time the market. Essentially, you invest a steady amount of money in a particular asset on a set schedule. Since you're building your position over time, you're all but certain to buy some of your shares at really affordable prices.

Dollar-cost averaging is really easy for the modern investor as most brokerage firms allow you to automate the process.

5 Winning Stocks Under $49
We hear it over and over from investors, “I wish I had bought Amazon or Netflix when they were first recommended by the Motley Fool. I’d be sitting on a gold mine!” And it’s true. And while Amazon and Netflix have had a good run, we think these 5 other stocks are screaming buys. And you can buy them now for less than $49 a share! Simply click here to learn how to get your copy of “5 Growth Stocks Under $49” for FREE for a limited time only.

Most people are glued to their phones 24/7, which makes it much more likely that modern investors will overreact to a market crash.

Don't fall into this trap. If you're confident in your investments, you should hold them through downturns so you can take advantage of the inevitable recovery.

When you're building your portfolio, you should also stick with the traditional rule of investing in only what you understand. That's even more important with new and largely unregulated markets, such as the cryptocurrency market.

If you have a deep understanding of what you're buying, how it's supposed to make money, and what the risks are, you're less likely to suffer losses and more likely to choose assets that outperform.

The internet has made it easier than ever to research investment strategies, brokerage firms, and companies that you wish to invest in. There's no excuse for modern investors not to educate themselves before they put their money on the line.

Spend some time reading about investing basics if you're just getting started, and make sure you keep up-to-date on new developments in companies you've bought shares of.

ALSO READ: 2 Growth Stocks That Could Make You a Millionaire

Finally, decide how much time you want to devote to managing your investment portfolio.

If you want a hands-off approach, building a portfolio of ETFs or using a robo-advisor might be the way to go.

But if you want the potential upside that comes with buying shares of individual companies, make sure you're devoting enough time to researching them, investing in a good mix, and monitoring their performance over time.

5 Winning Stocks Under $49
We hear it over and over from investors, “I wish I had bought Amazon or Netflix when they were first recommended by the Motley Fool. I’d be sitting on a gold mine!” And it’s true. And while Amazon and Netflix have had a good run, we think these 5 other stocks are screaming buys. And you can buy them now for less than $49 a share! Simply click here to learn how to get your copy of “5 Growth Stocks Under $49” for FREE for a limited time only.

With a little effort and some patience, it's possible to be a strong modern-day investor and maximize your chances of building a portfolio that will grow over time.

The sooner you get started developing your investment thesis and buying an appropriate mix of assets, the sooner your money can go to work for you.

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