Knowledge and wisdom are two different things. We don’t need to waste our time trying to distinguish them. You can refer a dictionary. You may be able to have the most financial knowledge, but make terrible decisions about investment planning. Despite being almost nonexistent in financial literacy, some people make enormous profits from their investments.
Habits or behavior are the best way to make smart investment decisions. It is wisdom, in other words. According to numerous studies, successful investors follow a certain behavioral pattern. These are some of the traits that successful investors use to reap rich returns on their investments.
They adhere to a well-defined investment strategy
The best investors are those who have carefully thought about, researched, and created a clear investment strategy. They break it down by allocation and period.
Smart strategy is the key to long-term success and investment discipline. A disciplined investment strategy is the key to success for any investor, regardless of all the noise. Their investment strategy is their guide to navigate through the maze of uncertainties.
Emotional discipline and critical thinking
It was the right thing to do. The lack of emotional discipline can lead to rumours and tittle tattle. This can lead to a lack of focus and inaction. This can make it difficult to follow your investment strategy.
Successful investors think critically before making an investment decision. Smart investors don’t stick with a loss-making investment. It’s not like saying, “It was my first home; how can it be sold at a loss?” It doesn’t matter if there isn’t a long-term positive outlook. If it is bleeding, then you should pull the money out and invest elsewhere.
They continue to learn
Successful investors, financial planners are voracious readers. They are always looking for new investment opportunities and financial aspects. They don’t wait for others to share their knowledge. They stay up-to-date with the latest developments.
They are able to stay ahead of the pack by learning new skills and making smarter profits. They can avoid making the same mistake again by learning. A wise man learns from the mistakes of others, as is the famous proverb.
They take full ownership of their wealth and assets
Money is power. Successful investors understand this and fight to protect it. They are aware that their hard earned money is theirs. They are therefore protective of their wealth.
What does this mean? Protective does not mean that they will use swords or guns to harm others. They ensure their wealth does not get eroded by inflation, market risk, or other unavoidable circumstances.
They have a plan B in case of an investment error and are ready for any emergency.
They create their own path
Investors who are successful do not think like sheep. They think and act independently. They choose their own paths. Ghanshyam das Birla, a pioneer in the field of jute technology, made a large investment in it during the first world war. He realized that it was the product for the future. Dhirubhai ambani made a fortune in petrochemicals. Dhirubhai’s older son, Mr Mukesh Ambani, saw data as the new fuel. Reliance Jio has been making profits even though all other telecom companies are in decline.
They are willing to take risks and flow with the currents. Shakespeare stated that tides are in men’s affairs when they face them head-on.
They will be there for you.
Investors who are successful think long-term. They see the big picture and don’t worry about short-term problems. They are required to play more innings.
Remember that winning investments requires you to stay for a long time. They don’t want to be rich in an instant. They think about creating wealth, not just making money. Wealth creation is key to society’s overall development. Warren Buffet is a wealth creator who doesn’t hesitate to give back. This is how they reach their goals.
They move quickly
Investors who succeed are not inertia-prone do not have a lot to lose. They take initiative and don’t believe in procrastination. They believe that the money will rotate faster and they can earn more. They also know the benefits of being proactive. SIP planning, such as for mutual funds, should be done at an early stage in the carrier.
Let’s not rush. SIP investors who invest in SIP early on and keep doing so for a long time have higher returns than the average investor.
They don’t let their money rest in banks or lockers. They use it to reach their goals. This is what makes the difference in the game. They don’t like losing money to penalties, fines, and unneeded taxes.
They don’t like to spend too much
They are savvy in spending and don’t like to overspend. They are strong negotiators who love to get the best deal possible. They don’t like to spend any more.
Narayan Murthy is the icon of Indian software industry. He lives modestly. This behavior is perfectly illustrated in Robert Kiyosaki’s book Rich Dad, Poor Dad. He says that a large house is better than a large car.
Lower wasteful spending results in greater savings, which means higher returns on money invested and saved.
Warren Buffet is right to say that Expenses = Earning-Savings.
Although there are many other factors, I tried to highlight some of the key behavioral patterns of successful investors. I hope you find this useful. When it comes to investing planning, make the best decisions.