Are you a Successful Investor?
Do you want to be a successful investor?
Or you think the road map to successful investing is tough and difficult to achieve?
If you are one of those, then this article shall help you to understand the traits of a successful investor and if followed properly would put you on the path of an effective investor.
As the famous Author, Mr. Shiv Khera Says
“Winners don’t do different things; they do things differently”
The power of regular investing & building wealth to achieve long-term goals has been proven time and again. Even then not many inculcate the habit of investing. So, what separates successful investors from the rest? That’s a big question.
It’s not accidental that certain investors reach the zenith while others are accelerating fast towards nadir and not able to start building investment for their goals. Surely there are attributes that set investors like Mr. Rakesh Jhunjhunwala, Mr. Radhakishan Damani, Mr. Ramesh Damani, and Mr. Raamdeo Agrawal separated from the average investor, they essentially do things differently, very differently.
Before we try to get into the shoes of a successful investor its important to think and act like them today and every day. A successful investor is not only able to achieve his set goal on or before time but also achieves financial independence.
Based on my research and personal experience over a decade I have tried to compile a list of 10 habits which a successful investor poses, though the same is not exhaustive. But having all or some of them would make a great difference in investment habits and journey towards financial independence.
1. Successful investor Start early don’t delay
Starting early is a foundation for investment success. Starting early not only helps you in achieving the goals early but also guarantees financial freedom in golden years (retirement).
Let’s take the example of two friends. The first friend started investing 15,000 Rs/pm at the age of 25 and the second friend started his investment journey with the same amount after 10 years when he was 35.
which one according to you shall have high wealth and by how much ? Just guess.
The first friend invested 18 lakhs Rs. more than a second friend.
The retirement corpus (at age 60) of first would be a massive 6.90 Crore compare to just 2.85 Crore for a second (assuming 12% return). The reason behind this surprising number is compounding.
As Albert Einstein mentioned, “It just does not stop”, compounding is the investor’s best friend. Use it to your advantage, as much as you can. Don’t wait for an opportune time for investment start investing with whatever you have, whenever you have.
2.Set goals & Stay invested
Having SMART goals for any given investment is absolutely critical. The SMART can be defined as :-
- S – Specific
- M – Measurable
- A – Achievable
- R – Realistic
- T – Time-Bound
By knowing the amount of money you would be needing and having a clear-cut investment goal, you can begin to map out an investment plan well in time. That will, surely, lead to investment success. Not only that a timely evaluation of the goal, increases the chances of goal accomplishment.
The first step towards being a successful investor is simply being invested. You can’t win if you never play the game, it has been proven that those who have invested for the long term or till the goal date, are the actual winners.
3. Have Realistic Expectations
The successful investors carry a realistic expectation of their investment and their circumstances. They always have an investment plan mentally prepared. A successful investor stays realistic about investment return.
Having a realistic expectation not only prevents investors from breaking or stopping investment but also getting into the wrong avenues.
Successful investors have high perseverance, it’s true that building investment is not easy and would definitely come with hiccups and hardships. Investments of any kind are definitely not guaranteed to give positive results, but the odds of them working, in general, tend to increase on a longer time horizon as opposed to a shorter time horizon
In simple words, if someone has bought gold jewelry and value of the same has fallen, that person could sell the jewelry and take the loss, or he could be bit persevere and not be concerned with short-term price fluctuations.
Investors know investing is like a roller coaster in amusement parks and has ups and downs. They have been riding this roller coaster for a long time, they take the bumps in stride, knowing that staying on the ride and not hastily getting off will be paramount to their investment success.
As the ace investor warren buffet says “Don’t put all your eggs in one basket” Successful investors follow diversification (owning a variety of investment avenues including stocks, real estate, gold, mutual fund etc.), which helps in controlling risk.
An appropriate investment mix results in a portfolio that delivers growth potential with an acceptable level of risk. Though Diversification doesn’t guarantee gains, it aims to provide a reasonable trade-off between risk and return.
6.Invest Regularly & Increase
A successful investor keeps his investment regular even though there are spells of ups and downs. He understands it’s a part of the long-term games and it’s essential to have good returns in the end.
During various stock market crashes when stocks dropped nearly 50% must have forced many to run for shelters, but the successful investor stayed calm and increase their exposure and made a decent return on investment in the coming years.
As warren buffet says “Be fearful when others are greedy and greedy when others are fearful”. A successful investor also invests his investment regularly as and when additional surplus money is available. The theory simply don’t burn cash in conspicuous consumption rather invest.
7.Invest, Don’t Speculate
A successful investor believes in investment rather than speculation.
Investment is done with the aim to earn a return over the long term on the contrary speculation is done to earn return very quickly may be in a days’ time. Also, speculation is based on greed, not logic.
Speculation might give a successful positive return on the short-run but its investment which wins in the long run.
8.Build passive investment
Successful investors prefer to go for a passive investment strategy. Passive investment is all about long term benefits. Investors prefer to keep their investment minimum and earn high returns in the long run. Passive management helps to save extra money on charges of less or no fees.
While going for passive investment, investors does not have to waste their time evaluating the company reports; instead they can focus on their decision about making better investments.
Furthermore, passive investment is all about transparency. The investors have a clear vision of what their funds are holding, which makes it very predictable. The predictable nature of passive investment makes it easy for investors to make their decisions.
9.Research and Check your Investment Decision and then stick to it:
Taking risks while making investments is one of the common things that a successful investor does. However, what they don’t do is go blind.
A successful investor prefers to do his research before he is ready to make an investment decision. Investing itself is a tricky thing in which you are expecting some benefits in the long run.
It will be a complete disappointment if you don’t end up with the best return on investments as you expected it to be.
This is the reason that you need to research a lot. If you are investing in a company’s stock, start with evaluating its performance report. Check how many ups and downs the company has been through. Before signing any investment deal, make sure you have read all the terms and conditions, and there are no hidden charges that might pop-up when you start enjoying the benefits that were promised.
The next thing that you need to do, once you have decided, you should stick to it.
Your research means nothing if you are a double-minded person and do not have any ability to stick to your decisions. The investment is all about firm decision-making skills which is why you need to stick to your decision
10.Learn from mistakes:
As mentioned ups and downs are part of the long-term games a successful investor is not fearful of the losses but he makes sure to learn the mistake and not to repeat the same. A successful investor is a good learner and has a far sight view.
Investing can be complex, but some of the most important habits of successful investors are pretty simple to follow and adapt. If you build a smart plan and stick with it, stay invested, save enough, make reasonable investment choices, do research, and be aware of taxes.
you have adopted some of the key traits that may lead to success.