Tips To Establishing A Successful Career As An Investor

Trying to establish a career as an investor is not easy. There are a lot of risks involved, besides buying and selling stocks. Here are tips to help you succeed and have a successful career as an investor.

Business Plan

Becoming a full time investor is a business, which is why you need to develop a business plan. Developing your business plan will help you as you become a full time money manager. Make sure that your business plan includes an income statement, balance sheet, and statement of cash flows. Be sure to also list any marketing strategies, licensing and registration.

Decide How You Wanna Work

You can choose to work alone as a Sole Proprietorship or you can join others to form a partnership. This is an important decision, because if you choose a Sole Proprietorship, you will have to deal with the highs and lows alone, or you can choose to delegate some of the responsibility through a partnership.

Decide how you want the business to be structured. You have to analzye your tax situation, as well as how much paperwork you want to deal with. With a Sole Proprietorship, you will have unlimited liability and be taxed directly. Under a partnership, you and your partners are only responsible for your own individual capital contributions.

Different Strategies

You can choose to trade for your own account, which means that you will be solely earning income from generating capital gains that put your personal capital at risk. This is a very high risk, high reward strategy.

You will have to raise capital. Most of your clients will require a track record of good performance and documentation before giving you control of their funds. Before you can start managing other people's money, you will need to secure licensing, such as an Registered Investment Advisor License. Talk to your state securities bureau or the Securities and Exchange Commission.

Decide whether you want to manage the money in a mutual fund or hedge fund. You can assign your clients an asset based fee, which comes from the assets already under management, or a performance fee, which is a percentage of the profits generated by you. There are many different market environments, so be aware of that and pay attention to the morale of the investors.

Your Mindset Is Key

Becoming an investor is a major career choice. There will be set backs and difficulties, but as long as you are willing to devote the time and effort, you will be successful.

William Doonan is a tax law and legal expert in New York.