History Says the Most Successful Long-Term Investors All Have This 1 Simple Practice in Common

Investing in the stock market can certainly seem daunting for beginners. However, it's best to keep things simple at first. Focusing on the most effective tactics raises the chances of achieving a favorable outcome.

There's a single tip that stands out, and history shows that the most successful long-term investors have this one simple practice in common.

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Upgrade the way you think and behave

Becoming a successful investor requires the ability to pick the right stocks and exchange-traded funds. Market participants must also ensure their portfolios are adequately diversified.

However, I believe that the most important trait to successful investing is having the right temperament. This means that you must upgrade the way you think and behave. Patience, discipline, and emotional intelligence are essential characteristics that will determine how much money you ultimately make in the stock market.

One way to improve at this is to have a long-term time horizon. Behave like a business owner, not a short-term stock trader. These days, there's so much information out there that it's easy to get caught up in the market's noise. But being able to identify high-quality stocks and determine the variables that matter most to you will help you avoid frequent trading.

What's more, having the right behavioral makeup will minimize the risks of getting sucked into the market's periods of fear and greed, or of finding yourself following the herd. This helps reduce the likelihood of buying and selling stocks at the absolute worst times, which can be detrimental to your portfolio. Moreover, it becomes easier to handle the inevitable ups and downs of normal volatility.

Let compounding work

Understandably, many newbie investors overestimate the returns they can achieve in the near term, while simultaneously underestimating how much money they can make years and decades down the road. However, it's the latter area where compounding comes into play. If you have the patience and discipline to understand that the stock market rewards investors with extended time horizons, this perspective will benefit you.

Relatively small sums of starting capital can balloon into significant amounts of money. Based on the S&P 500 index's (SNPINDEX: ^GSPC) historical average annualized total return of 10%, $10,000 would grow to $174,500 in 30 years. If you're able to dollar-cost average and allocate an additional $100 per month during that period, an initial $10,000 outlay would grow to $381,800 in three decades.

This is precisely how compounding works. It stacks the odds in favor of investors who have the right temperament, which is key to success in the stock market.

Neil Patel has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.