There are 7 habits that successful investors do on a regular basis that set them apart from the rest of the flock. In fact, highly successful investors often act very differently from the average investor because of these 7 habits. This isn't because they believe in contrarian investing, but because they use information that the average investor doesn't think about when making investment decisions. It's not the way someone acts that makes them a highly effective investor. Instead, it's the information they find that changes the way they invest in a big way.
These 7 habits are what make successful investors act the way they do:
Self-reliance is the best way to make sure no one sells you products with the highest fees or commissions or, worse, steals from your account or manages it poorly (which is almost the same as stealing).
In investing, emotions and hope are both bad. This is not the case in relationships. If you fall in love with an investment or stock and don't sell when you've made a lot of money or haven't lost much, it's more likely that the investment will go from good to bad or bad to worse. Hope that an investment will make up for losses you didn't see coming is riskier than having clear rules about when to sell, no matter how much you like the investment.
The best investors have a system that they've spent time learning and have tailored to their strengths so that investing doesn't take over their lives. Investors who are good at what they do make a lot of money and still have a lot of free time to spend with their friends and families.
Whenever you hear the words "there is no downside," that should be a warning sign. There is no such thing as a risk-free investment. Even though no U.S. government treasuries have ever defaulted up to this point, there is still a small chance that they will. In fact, the national debt ceiling had to be raised in 2006 so that the government could keep paying the interest on treasuries. Always take the time to learn as much as you can about what you're investing in.
Every investor who has been really successful has had some "home runs." This meant putting money into assets with a lot of ups and downs. Only your absolute returns matter at the end of the day. If this means you have to put 15 percent of your portfolio into assets that are much riskier than the other 85 percent, and if it's likely that some of those assets will lose money but others will be huge home runs, it's better to invest this way than to put all of your money into assets that you expect to return 8 percent a year.
Effective investors take calculated risks on assets with high levels of volatility to earn returns that blow the average investor out of the water. Again, this is not a riskier way to invest than the way the other guy does it. In fact, the cautious investor is taking a bigger risk because there is a much higher chance that he or she will never get rich. Investors who are good at what they do make sure they not only understand this idea, but also use it well. The vast majority of financial consultants who work for big investment firms around the world don't understand this idea. The first habit, "Learn to invest in yourself," is so important because of this.
The flattening of the world and easier access to high-quality information about business, politics, and finance have changed the best ways to invest in a big way. You can learn more about this by searching for "Long tail of investment strategies" and "Long tail of investment analysis" on Google.
It's just not possible. Specialize, specialise, specialise. Learn as much as you can about several asset classes and then find the best places to invest in these asset classes. Join an investment club with other experts and use their knowledge to find the best investment opportunities not just in your country but all over the world.
