3 investing secrets of the rich and famous

When you're just starting out in investing, its common to think that it's fiendishly difficult to get ahead, and that those who have become rich and famous from it must have a lot of closely-guarded secrets.

They certainly do have some but they're, well, actually not that secret. And there's nothing fiendish about it.

1. Focus your strategy

What do beginners frequently do that successful investors steer clear of? They chase the next hot stock, whichever is in the news, and chop and change their targets the way sentiments blow in the wind.

One of the first (and best) investing books I read was The Zulu Principle by Jim Slater. His core argument is that if you choose a particular strategy, an industry, or a particular investing theme, you should focus all your attention on it and learn everything you can about it.

If you do that, you'll end up knowing more about it than probably 99% of investors out there -- similar to the way Mrs Slater had started reading about the Zulu people.

Jim Slater's personal focus was on becoming an expert in growth shares, and his book developed some key principles for finding the best. But whatever your choice (mine is to focus on dividend payers with strong cash flow and little debt), focus your efforts on learning everything you can about it.

2. Demand excellence

Another big beginners' mistake is looking for the best bargains around, on the assumption that whatever's the cheapest right now (by whatever measure) is most likely to make you big profits.

But what they often end up buying is cheap rubbish, and the hoped-for pot of gold vanishes like rainbows in sunshine.

Take a look at the constituents of the FTSE 100, the index of the UK's very biggest public companies, and see how many of them are dirt-cheap 'jam tomorrow' bargains.

You'll find none, because they're all well managed, they're churning out top quality products and services, and they're earning steady profits for their shareholders.

Warren Buffett famously said: "It's better to buy a wonderful company at a fair price than to buy a fair company at a wonderful price."

He's right, and you're far more likely to be successful if you focus on finding the very best companies rather than the very cheapest.

3. Never fall in love

Falling in love in real life might be great fun -- but you should never, ever, fall in love with any of your shares. No, you should look at every one of them with ruthless cold-hearted rationality, and not be afraid to dump them the minute they fail to meet up to your expectations.

One example is Tesco, which for years was a byword for investment quality, looked set to conquer international markets, and could do no wrong. But it was just too easy to become attached to it and fail to spot the approaching problems, and investors were taken by surprise by the assault from the cut-price Lidl and Aldi.

And even when we saw it happening, many had become too attached and just sat there watching their investment falling.

Warren Buffett didn't do that. He recognised he'd made a mistake and put his hands up to it, so he dumped his Tesco shares and never looked back.

4. Become a millionaire

OK, this one's not a secret, it's just what you could achieve with a lifetime of following these three secrets coupled with a 10-point financial strategy.

The Motley Fool's 10 Steps To Making A Million In The Market report takes you through what you need to know, one step at a time, and should set you on your way nicely.

And it won't cost you a penny, so click here for your very own copy now.

Alan Oscroft has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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