Follow these investment ideas for beginners to benefit from superior long-term gains from your portfolio

If you ask investors who have a few decades of successful investing behind them, few, if any, will credit their success to any one investment or investing technique. Instead, most will talk about the value of everyday qualities like patience, consistency and a healthy sense of skepticism—in short, the kind of qualities that bring success in all aspects of life, not just investing.

These qualities help you apply our three-part TSI Network formula for investment success: invest mainly in well-established, dividend-paying stocks; spread your money out across most if not all of the five main economic sectors (Manufacturing & Industry; Resources; Consumer; Finance; and Utilities); and downplay stocks in the broker/media limelight.

Here are investment ideas for beginners—and for experienced investors:

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Investment ideas for beginners: Be patient with your holdings if you want them to pay off

Losing patience can cause you to sell your best choices right before a big rise.

All too often, investors buy a promising stock just as it enters a period of price stagnation. Even the best-performing stocks run into these unpredictable phases from time to time. They move mainly sideways in a wide range for months or years before their next big rise begins. (Stock brokers often refer to these stocks as “dead money.”)

If you lack patience, you run a big risk of selling your best choices in the midst of one of these phases, prior to the next big move upward. If you lose patience and sell, you are particularly likely to do so in the low end of the trading range, when stock prices have weakened and confidence in the stock has waned.

Investment ideas for beginners: Think like a portfolio manager to make better decisions

Portfolio management involves choosing investments for investor portfolios. These selections are based on stock quality, but also on investment objectives, risk tolerance, age and personal circumstances.

Portfolio managers choose and monitor investment holdings for individuals or institutions. Portfolio managers choose from a range of investments, including stocks and bonds, to maximize returns for their clients.

For successful investors, good portfolio management will include these four criteria:

1. Spread your money out across most if not all of the five main economic sectors (Finance, Utilities, Manufacturing, Resources, and Consumer). The proportions should depend in part on your objectives and the risk you can accept.
2. Balance aggressive and conservative investments in your portfolio, in line with your investment objectives, and the market outlook. Above all, avoid the urge to become more aggressive as prices rise and more conservative as prices fall.
3. Good portfolio management also means balancing your investments geographically. Avoid focusing your portfolio completely on any one country or region.
4. Market leaders and market laggards both deserve a place in your portfolio. Over long periods, high-quality stocks play leapfrog. Some of the lowest-risk, highest-profit buys you’ll ever find are overlooked or out-of-fashion stocks of high investment quality that are coming back into investor favour.

Investment ideas for beginners: Focus on high-quality stocks to build a retirement portfolio

We think the best retirement plan for most investors is to do as we do for our clients. That is, focus on high-quality stocks, and resist the urge to hold fixed-return investments—although some conservative clients choose to hold some short-term fixed-income cash-equivalent reserves that they can dip into as needed, to avoid having to sell stocks when prices are low.

Our basic Successful Investor retirement plan is to build a portfolio of high-quality, dividend-paying stocks, spread out across most if not all of the five main economic sectors: Manufacturing & Industry; Resources & Commodities; Consumer; Finance; and Utilities. Then you live off your dividends, plus any government and/or private pension(s) you receive, and sell stocks mainly when you need more money for living expenses.

When our clients need to sell stocks, tax considerations play a secondary role. Instead, we choose to sell holdings with the goal of culling your portfolio—selling your weakest holdings. That way, every time we sell anything for you, we upgrade your portfolio.

Most investors understand our approach. It makes sense to them. They know you get what you pay for, but only if you shop carefully. They also understand that you don’t get something for nothing. But the idea of an all-stocks portfolio still makes some investors uneasy. They grew up at a time when it was customary for retirees to hold bonds, and it made economic sense. But back then, interest rates were high.

With a Successful Investor-style portfolio, you have a chance to earn some after-tax, after-inflation profit on your investments.

My advice is to focus on the facts. They can help you see the flaws in fixed ideas about investments, and sidestep the risk of unintended, avoidable losses.

Some focus on penny stocks and speculation as investment ideas for beginners because they hope to “hit it big.” What would you say to investors with this mindset?

What would you change about your early investments if you could go back?