7 Everyday Habits of The World’s Most Successful Investors

Posted on May 6, 2015 and updated May 7, 2015 in Life Insurance Canada News 6 min read
Habbits Successful Investors

Investing is a lot harder than it sounds. For every success story out there, there are multiple stories of failed investments that are never told.

If you are a new investor looking to be successful, it’s important that you take a look at how some of the world’s most successful investors act and approach the industry.

Many of these aforementioned investors also share similar habits that have proven to be a key to their financial success. Let’s examine seven everyday habits that these successful investors all follow.

1. Set Goals For Yourself

Before you think about investing, set goals for yourself. These goals should answer some basic questions such as your reasons for investing and your expected financial returns.

Think of these goals as the guiding force for your investments. Once you have set your goals and follow them, your investment choices will become more focused and disciplined. Every choice you make should be solely focused towards accomplishing your goals.

2. Start Investing As Early As Possible

Contrary to popular belief, you don’t need to reach a certain age before you should start thinking about investing. It’s never too early to start investing. Especially if you are doing it to plan for your retirement.

Remember, investments mature over time. So, the earlier you invest, the greater your chances for a bigger payout in the future.

Many younger people put off at the idea of investing because they are under the impression that it takes a hefty principal sum to invest. This couldn’t be further from the truth. There are investment opportunities in the market for people in nearly every income bracket. All it takes is a little research to find out which investments suit your situation the best.

3. Avoid Changing Your Goals After You Invest

If you began your investments with certain goals in mind, try to avoid changing those goals.

This isn’t to say that you should never change your goals. After all, an individual’s circumstances and needs can gradually change over the course of their life. If you need to re-think your existing goals because of this, that’s fine.

But, if you try changing your goals impulsively, you might end up getting sidetracked. In today’s investment industry, you’ll be presented with a lot of risky choices that will promise huge payoffs. While you shouldn’t completely ignore these opportunities, never change your existing goals in order to accommodate those risky choices.

4. Take Responsibility For Your Investments

Always remember this: you are the one in control of your investments. Not your broker, financial advisor or anybody else.

While you can delegate the management of your investments to others, the ultimate responsibility for the well-being of your investments solely lies with you. It also goes without saying that you stand to be the most affected if your investments prosper or decline.

Monitoring your investments regularly, studying the market and making informed decisions are just some of the ways you can take responsibility for own investments and ensure that they work to your benefit.

5. Build Up Your Savings And Use Them Wisely

From cutting down on unnecessary expenses to learning to live on less money, there are plenty of ways to build up your total savings.

You obviously can’t be a successful investor if you don’t have any principal money to invest. That’s why it’s imperative that you save as much money as possible for your investments.

With that being said, never spend all or even most of your savings on investments (unless these are completely safe investment options with a guaranteed return of principal). For older investors who have built up their nest egg, segregated funds may be a good fit as they offer guarantees on the principal investment should there be a sharp decline in the market.

Remember, many investments can be a risky business. Even the best investors have taken their share of losses and failures. Before you invest, always ensure that you have enough money saved in an emergency fund for you to stay on your feet financially in case your investments take a loss.

6. Reinvest Your Dividends

Once you start to see your investments grow, it becomes really tempting to want payouts right away. After all, who doesn’t want to reap the benefits of their hard work, right?

But, unless you really need the payout, you’re much better off reinvesting dividends from your current investments. It goes without saying that reinvesting dividends have the potential to pay out much larger dividends in the future.

So, you’re basically trading smaller short term gains for bigger long term gains. That’s a trade off most successful investors are always willing to make.

7. Understand The Concept of Risk/Reward

Let’s be honest, most of the top investors in the world didn’t get to their current financial level by always playing things safe.

There are times where you will be presented with risky trade opportunities that project huge payoffs. This is where you will need to do the proper research required to determine whether the payoffs are worth the risk. Remember ‘projections’ are not ‘promises’ so exercise your own due diligence before putting your money at risk.

In most cases, you should aim to have a risk/reward ration of at least 2:1 on any trade. This ensures that any potential payoffs from this trade will be at least twice as big as a potential loss.

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