The question is – Who doesn’t want to become one?
You save and invest your hard-earned money, all with the aim of living a comfortable life when the salary cheque stops coming.
With your financial goals in mind, you make resolutions and sometimes also show your willpower to achieve them.
But then, is this enough to become wealthy over the long term?
The answer is – No!
To become a wealthy investor, you don’t need only willpower. What you need is the right investing habits and the determination to practice them.
You see, simply deciding to change your investing behaviour may work for a while. But when you are faced with the stresses of other life events, like the need to pay off that burdensome home loan or to fund a family emergency, that change of behaviour is likely to succumb to an emotional desire for making fast money.
But the fact remains that investing is not a 100-meter race. It is a marathon, which requires you to practice the right habits.
There are several habits that can stand you and your investments in good stead over the long term.
Some of these are:
- Habit of reading – Annual reports, Warren Buffett’s letters to shareholders, The Intelligent Investor
- Habit of seeking capital preservation more than capital growth
- Habit of studying risk in every investment (Ask yourself – Can I lose my entire capital by investing in this stock?)
- Habit of doing proper homework before investing
- Habit of not timing the market and instead investing regularly
- Habit of admitting mistakes early
- Habit of patience
- Habit of keeping emotions under control while investing
- Habit of taking 100% responsibility for your actions and results
The great philosopher Aristotle once said, “We are what we repeatedly do. Excellence, then, is not an act, but a habit.”
You can excel in stock market investing and earn great wealth from your stocks over the long run, but only if you practice the right kind of habits.
This is what will separate you from other investors who are out there running a rat race and not knowing what they are doing, why they are doing it, and where they are going.
Always remember this – You don’t need to become a different person to become a wealthy investor. It’s never what you are, but what you do.
Now tell me – What good investing habits do you practice in your aim to become a wealthy investor?
Good investing habits that i practice in my aim to become a wealthy investor are:
1. definitely reading, specially blogs like yours and tip blog, and many others. TIP BLOG is on top op my list so far.
2. taking responsibility of my investment decision.
3. buying when others are selling, however i do get confused at times and greed comes in and stops me from buying at bad times hoping it will fall more and more.
Hi Vikrant,
Thanks for your comments!
1. definitely reading, specially blogs like yours and tip blog, and many others. TIP BLOG is on top op my list so far.
I hope Safal Niveshak reaches there soon as well. 🙂
2. taking responsibility of my investment decision.
Hard to find. I hope more investors can take lessons from you.
3. buying when others are selling, however i do get confused at times and greed comes in and stops me from buying at bad times hoping it will fall more and more.
It’s simply human nature, but till the time you are conscious about what you are doing, I believe you are moving in the right direction.
Regards,
Vishal
Dear Vishal,
I do practice some good investing habits with aim to become a wealthy investor and I share with fellow readers with a hope it will be of use to all (I am sure they are certainly not difficult to follow):
1. Never mix Investment & Insurance: Buy Term Plans of adequate value for Insurance.
2. Invest with a purpose after understanding the risk involved: Have a plan with inflation adjusted target value for each goal, targeted return and investment duration. Maintain an asset allocation according to your risk taking capability.
3. Invest through SIP’s in Mutual Fund: Remove your emotions and invest according to your plan through SIPs in quality mutual funds. Don’t cheer on small profits and dont panic on losses. Always concentrate on your asset allocation. Try and buy more when there is lot of pessimism (like Sep 2008 to March 2009) and sell when there is lot of optimism (Jan 2008), again look at your asset allocation before buy or sell.
5. Invest in Stocks: If you have surplus after doing 1,2,3. Do invest in stocks after understanding about stock investing. If you don’t understand, invest additional funds in Mutual Fund itself.
5. Switch off the Business channels: Avoid all business channel (I know you and me can’t avoid), rather consider it as an another entertainment channel. Don’t act based on the ticker and news flashing in front of you.
Thanks Ajay! This is a great list of do’s and don’ts for anyone starting out as an investor. Thank you so much for sharing. Regards.