Investing can be intimidating.
But those who do it right tend to share similar characteristics, according to Sarah Stanley Fallaw, the director of research for the Affluent Market Institute. She coauthored "The Next Millionaire Next Door: Enduring Strategies for Building Wealth," for which she surveyed more than 600 millionaires in America.
During her research, she found that five components mark successful investors, including those who are rich: a personality for risk, a high-risk preference, confidence in investing, composure, and knowledge regarding investments and investing.
But millionaire investors do one thing differently: They make more effort with the final component.
"They spend time building knowledge and expertise in managing investments," Stanley Fallaw wrote.
Millionaire investors spend more time planning for future investments
According to her, millionaire investors spend an average of 10.5 hours a month studying and planning for future investments. That's nearly two hours more than under-accumulators of wealth — defined as those with a net worth less than one-half of their expected net worth based on age and earnings — who spend 8.7 hours a month doing so.
(Photo by Adeolu Eletu)
In her study, 55% of millionaires said they believe their investing success is because of their own efforts in studying and becoming educated, rather than advice provided by professionals.
"Their literacy in financial matters means that they are more tolerant of taking investment-related risks," Stanley Fallaw wrote. "Future outlook and financial knowledge typically relate to taking greater financial risk, so the time they spend in managing and researching investments helps in decision-making."
Financial literacy is related to financial "success" outcomes more so than cognitive ability, according to Stanley Fallaw. Having the knowledge required to make appropriate financial decisions — along with a long-term and future-oriented outlook, as well as a calm manner — allows millionaires to make better financial decisions, she said.
Millionaires also favor index funds
Millionaire investors also have something in common when it comes to investing strategies: They act simply, according to John, who runs the personal-finance blog ESI Money and retired early at the age of 52 with a million net worth. He interviewed 100 millionaires over the past few years and found that many of them use the same investing strategy: investing in low-cost index funds.
"The high returns and low costs of stock index funds (I personally prefer Vanguard as do many millionaires) are the foundation that many a millionaire's wealth is built upon," he wrote in a blog post.
"Index funds are the most straightforward, cheapest, and most likely way to see strong long-term returns," the former hedge-fund manager Chelsea Brennan, who managed a id="listicle-2633716796".3 billion portfolio, previously wrote in a post for Business Insider. "Index mutual funds offer instant diversification and guarantee returns equal to the market — because they are the market."
Even the billionaire investor Warren Buffett has championed low-cost investing, often recommending Vanguard's SP 500 index fund for the average investor, Business Insider reported. He previously called index funds "the most sensible equity investment."
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This article originally appeared on Business Insider. Follow @BusinessInsider on Twitter.