10 Effective Habits of Successful Investors:
So, what do successful investors have in common? Quite a number of things. But all those things can be pared down to just the following:
1. Clarity
The first common feature of all successful investors is clarity. They know exactly what they want, that is, the financial goals and objectives they want to achieve. Therefore, if you want to be one of them, you have to be clear about your investment goals, too.
2. Plan
Successful investors plan. They do not leave anything to chance. Armed with clarity, they itemise their goals and develop a definite strategy that they can use to achieve them. Every successful investor invests with a plan!
3. Understanding
Peter Lynch, the legendary investor advises, “Know what you own and know why you own it.” It is not a coincidence that arguably all successful investors have this habit in them. They put their money only on businesses they understand, preferably those within their circle of familiarity.
4. Saving
Surprisingly, successful investors are supersavers. The actual idea of millionaires is different from that movies and social media project. Most millionaire investors are supersavers who actually live far below their means.
5. Research
If you lack a flair for investment research, you had better develop it now. To succeed as an investor, researching is a highly-effective habit that you have to adopt. Successful investors research the stocks they want to buy so as to make informed decisions about them.
6. Cost-Effectiveness
As earlier hinted, successful investors are also highly cost-effective. They are savvy enough to realise how easily transaction costs and tax payments can erode most of the gains on their investments. So, they keep their eyes on them.
7. Experience
Successful investors have this interesting habit of seeking experience. Every investor miscalculates and makes erroneous conclusions about stocks at one time or the other. However, those that learn from their mistakes are those that eventually succeed; those that do not repeat them and fail.
8. Diversification
“Do not put all your eggs in our basket” is a timeless principle that successful investors, at every age and clime, have got in common. That is, successful investors diversify. For example, they buy different companies across different sectors. In fact, many of them also diversify into other investment vehicles such as real estate.
9. Investing
You might be surprised how “investing” can be one of the effective habits of successful investors. Isn’t that tautological? Well, it is not. Why? Because successful investors actually invest. They do not speculate. They do not bet. Instead, they just put their money in the stock market or any other time-tested investment vehicle for the long haul, without minding the intermittent noises around them. That is how they succeed.
10. Patience
The previous point brings us to this final point. It is practically impossible to be a successful investor without patience. Everyone wants to convert a few bucks into millions within a short time. Successful investors are not like that. They are usually patient folks that hold onto their investments for years and stay away from get-rich-quick schemes.