- A successful investor needs to have the determination and patience to remain firm on the investment path
- You can’t do much if you design smart strategies but don’t stick to it
- Read on to find out what other traits are needed
Making money, contrary to the popular belief, doesn’t require as much talent and skills as the right attitude towards it. You can’t do much if you design smart strategies but don’t stick to it. Successful investors have the determination and patience to pave their financial path and follow it till the end. The characteristic traits that lead them to success can be picked up by anyone.
Here are five such traits of successful investors:
Save First and Spend Later
Successful investors start the month by saving first and spending later and not the other way round. Saving first helps in keeping spending under control. This needs to be your first step towards building wealth. You can lock in your savings at the beginning of the month by automating it. You can set a standing instruction with the bank to deduct a certain amount at the beginning of every month for your Recurring Deposit account or mutual fund SIPs.
Invest As Per Objectives
Setting up practical goals and making investments in alignment with them is another trait which goes a long way. Considering that resources are limited, you need to rank your goals based on priorities and choose investment instruments according to your investment horizon. Goals such as children’s education, marriage and retirement planning are long term and require you to invest in assets such as Mutual Funds and PPFs. On the other hand, goals such as buying a car or going on a holiday could mean investing in short-term instruments such as liquid funds, recurring deposits.
Successful investors don’t fret on taking risks. In order to earn good return you need to invest in instruments that come with risk associated. Putting your entire savings in a conservative asset won’t let you build wealth at a fast pace. And, even the most conservative of assets come with a certain amount of risk linked to them. The interest rate keeps fluctuating from time to time. The risk taken can be hedged by a strong risk management plan.
Instead of focusing on one asset, the experienced investors diversify their investment. They say ‘don’t put all your eggs in one basket’. Different investment avenues have different return potential and different risk exposure. While equities fetch good return, they are highly volatile. Debt instruments come with relatively low risk and low return. Real estate investment on the other hand is less risky and fetches good return but lacks liquidity. So, while setting up a portfolio, it’s better to invest in different assets than to focus on one. This would minimise your overall risk exposure without compensating on return.
Resist The Impulse Of Withdrawals
Last but not the least, you need to be patient with your investments. Successful investors refrain from indulging in withdrawals based on what people have to say or by blindly following advertisements here and there. Withdrawal of investment before maturity defeats the purpose of goal-based investing. In order to stick to your investment, it’s important to remember the purpose of it. Long-term investments are capable of yielding good return if left undisturbed. So, avoid any impulse to break your investments before time is ripe.
Becoming a successful investor is easy if you can inculcate these traits gradually. However, do identify your weaknesses in the process and make amends where required.
BankBazaar is a leading online marketplace in India that helps consumers compare and apply for credit cards, personal loans,home loans,car loans and insurance.
(The author is CEO of Bank Bazaar)
Last Updated 31, Mar 2018, 6:42 PM IST