When it comes to financial planning, most people tend to stick to bank savings accounts. These are simple and easy to understand. Your deposit grows with the interest, and that’s all there is to it.
Investing in stocks, on the other hand, is often viewed with skepticism. Where no one loses money from saving in a bank account, investments can be risky depending on the stock you purchase or the timing of your purchase.
- Read more: How to Invest in Real Estate (The Basics)
Smart people know that saving in a bank account alone can be insufficient. Most banks don’t offer high interest rates. As such, it is still a good idea to diversify by maintaining a savings account and investing in the stock market.
The 5 Habits of a Successful Investor
Given the risks of stock investment, it is wise to learn from the techniques and strategies of investors who have succeeded in the stock market. Here are five habits of successful investors that everyone dabbling in the stock market should emulate:
1. Set up an emergency fund
Investing in stocks – especially if you foresee this as a potential retirement savings plan – means you won’t be taking out the money any time soon. You need to be prepared for emergency expenses, so it’s a good idea to set up a rainy day fund, just in case.
Often times, the fluctuation of the stock market can increase the investor’s anxiety. When you have a rainy day fund set up, though, you can be a bit more patient in waiting for the market to grow and increase your earnings.
2. Start early
Time is an important factor where investments are concerned. Patience is very important when you’re dealing with the stock market. A lot of people prefer get-rick-quick schemes, but true wealth lies in discipline and patience. Investing in the stock market won’t make you a millionaire over night.
What’s important is that you start as early as possible. By investing at a young age and doing so consistently, compound interest can make your portfolio earnings increase over time.
3. Do not be impulsive
Investing in stocks is about doing your research and carefully deliberating before making any stock purchases. It can be tempting to sell off stocks whose values have dipped, but this is not always a good idea. Most stocks – especially those of strong companies – will bounce back in time. Selling stocks off every time some form of change occurs can decrease your earnings.
4. Review your portfolio regularly
The stocks that were earning great two years ago might be weakening your portfolio today. It’s a very good practice to review the stocks you own from time to time. This way, you’ll be able to ensure that your portfolio helps your investments earn.
5. Be careful against following fads
In conclusion, there are certain habits of successful investors that help them achieve their financial goals. These habits include spending time learning about investments, being patient and having a long-term perspective. By following these habits, investors can increase their chances of success while protecting their portfolios in times of market volatility.
How to learn the habits of successful investors?
In order to learn the habits of successful investors, it is best to read their biographies or the books they have written on investments or economics.
» In this regard you can consult our section: The best Investing Books of all times.