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Does Career Success Carry Over to Investing?

Most successful professionals didn’t get where they are today by accident. It takes a particular skill set of ambition, intelligence, savvy and tenacity to be successful in the business world. Unfortunately, that skill set might actually do more harm than good when it comes to investing.

More often than not, people who have the drive to be successful in the business world have been successful their entire lives, going all the way back to elementary school. Compared to the complexities involved with a career spent running a large company, performing brain surgery on cancer patients or coding software to optimize internet search algorithms, the stock market may seem extremely simple. It’s easy to see how someone with a degree from an Ivy League university and 10 years of experience making six figures working as a director of an oil company could expect that same level of success when it comes time to start investing for retirement.

Unfortunately, successful investing requires its own unique skill set, one that only partially overlaps with that of a successful professional. Patience and savvy are certainly good for both. Ambition and confidence, two traits that can really propel a career, are not necessarily helpful when it comes to investing.

[See: 10 Skills the Best Investors Have.]

According to Mike Loewengart, vice president of investment strategy for E-Trade, the three Ds of professional success also apply well to investing — diligence, discipline and determination.

“After all, a business plan is in many ways similar to an investment plan,” Loewengart says. “Both require scrupulous research, fundamental analysis and, above all, the ability to focus on the long game.”

At the same time, the competitiveness that drives a successful career path can be a stumbling block when it comes to investing. Loewengart says comparing your individual returns to other investors or benchmarks can be a dangerous game.

“While benchmarking against indexes or funds can be important to know where you stand, it’s not about beating other investors at their own game. It’s about owning your individual goals and expectations and deploying capital to achieve those goals,” he says.

Intelligence certainly helps in the business world and in the investing world. But emotional intelligence, the ability to recognize, assess, control and manipulate emotions, may be far more important when it comes to investing than IQ. Many successful professionals are motivated by passion and emotion, but those same emotions can be an investor’s worst enemy when it comes to riding out the cycles of the market.

[See: 13 Ways to Take the Emotions Out of Investing.]

Owen Murray, director of investments for Horizon Advisors, says people who struggle with delegation in their careers can also have a tough time in the investing world. Micromanaging a company or a project can be annoying to employees, but micromanaging a retirement account can be a very costly mistake.

“Like in business, many successful investors realize that they can’t do it all themselves and seek help to delegate tasks outside of their areas of expertise,” Murray says.

He says entrepreneurs who are used to being their own bosses and understanding and managing every part of a company can have a particularly difficult time turning over control of their investment portfolio to an advisor.

“They will sometimes attempt to time the market by selling when they think the market is going down or by taking on more risk when they feel optimistic,” Murray says. “This approach rarely works and often has a negative impact on their portfolio.”

Ironically, many of these successful professionals would certainly balk at the idea that someone with no experience or education in their particular profession could step into the mix and excel on day one. If it doesn’t make sense that the average person on the street could take over your job, it would be equally absurd to assume that someone with little or no experience investing could be an instant market guru.

Ritholtz Wealth Management portfolio manager Ben Carlson says almost all professions have very little overlap with the world of Wall Street, and people with the most challenging careers can often be the most vulnerable when it comes time to invest.

“Most intelligent doctors, lawyers and engineers actually end up being terrible investors because they assume brilliance in their profession should translate into success in the markets,” Carlson says. “So I would say humility and some self-doubt is very important so you don’t become too overconfident in your investing abilities.”

[See: 9 Investing Myths That People Still Believe.]

Just because you understand the businesses and companies that trade on the market doesn’t necessarily mean you understand the nuances of the financial markets themselves. Successful professionals that are considering a head-first jump into investing should remember how simple their current jobs probably would have seemed when they were right out of high school or college. Then, they should imagine all the mistakes they would have made if given their current responsibilities at age 20.

Of all the differences between the business world and the investing world, there is certainly at least one major similarity: there’s no substitute for experience.

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Does Career Success Carry Over to Investing? originally appeared on usnews.com

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