From my first investment, I wanted to be successful.
But how could someone like me, a nobody, ever achieve the levels of success of the likes of Warren Buffet, Paul Tudor Jones, or Stanley Druckenmiller?
I was perplexed.
However, paying close attention, I realized that all successful investors share similar habits… and that it is possible to learn them.
Identifying these seven successful habits of highly successful investors was probably the most important step I took in developing as an investor myself. I’d like now to share them with the hope that they’ll prove as valuable for you.
Here they are…
#1: Start ASAP
As the Chinese say, “The best time to plant a tree was 20 years ago. The second-best time is now.”
The sooner you start investing, the greater your returns over time… thanks to compound interest. Even if you think you don’t have enough money to start investing right now, do it anyway. At one level, becoming a successful investor is about developing the right mindset and being disciplined. Sure, $50 a month won’t get you far, unless you start investing at birth, but it will create a habit and make investing a priority.
#2: Create An Investment Plan
Create an investment plan so you know exactly what your end goal is, how to get there, and what to expect along the way.
You can start by defining where you would like to end up. What is the final amount of invested capital you aspire to build… and what withdrawals will you be making in retirement?
Answer those two questions and then work backward. What investments are best suited to help you achieve that goal, what is the appropriate asset allocation, and so on.
#3: Stick To Your Plan
This is where it gets tricky. You must not allow yourself to be distracted or to detour. Sure, you can make a tweak here and there, but you should never overhaul your plan entirely. The only exception should be if your life situation changes fundamentally, due to a serious illness, losing your job, or some other emergency.
Your investment plan is first and foremost meant to keep you on track, especially when your emotions are tempting you to do otherwise… during stock market turmoil, for example.
Resist. Stick to your plan religiously, and you will avoid most pitfalls.
#4: Be Consistent
Once you’ve figured out how much money you need to add to your portfolio each month, again, stick with that program. The best way is to set up automatic transfers to your investment account. This way, you won’t forget to make your monthly contribution or allow competition for your available capital to interfere.
Find a way to make your monthly injection into your investment portfolio consistent. This will ensure you prioritize long-term financial goals without having to think about it every day.
You know this already, but it’s worth reminding yourself:
Never keep all your eggs in one basket. Don’t invest in a single stock. Spread your investment capital among as many as possible. This helps to protect your portfolio in the face of volatility.
As your portfolio grows, you should also diversify across asset classes, such as bonds, precious metals, and real estate.
#6: Increase Your Contributions When Possible
Got a raise or a bonus? Why not invest a portion of that money and increase your monthly investment amount?
Develop a habit of adding a portion of any extra money you receive toward your monthly investment amount. If building wealth is a priority, it should be easy to make that call. Your first thought in such a situation should always be to boost your portfolio. That’s the mindset of a successful investor.
#7: Get The Right Information
It’s easy to get carried away by what you hear on television or read in the newspaper and make emotional investment decisions. Fight this. Remind yourself of your investment plan.
Media’s business is to get an emotional response from you. That’s how they keep you glued to the screen. Don’t fall into the trap.
It can also be a smart idea to seek help from a professional financial advisor. While you might think you can do without it, a conversation with someone with long experience at building wealth and making money can give you a valuable outside perspective that can help you to achieve your personal financial goals.