Investment (like any other means of creating wealth) has produced a lot of millionaires and billionaires while at the same time, has eaten up some other people’s hard-earned money. The distinctions between them are apparent, and everyone will agree that investment is an excellent way to grow wealth. However, the habits and approach you use determine your failure or success.
Regardless of whether you are a new investor or you are already in the game of growing your wealth by making your money work for you through stock investment, there are important rules you need to follow. In the same way there are bad habits that if you do not avoid can cost you your money and make you frustrated either in the short or long run. What we want to discuss today are those Habits you should break to skyrocket your way to getting rich as an investor.
Habit 1: Getting Rich Overnight
This is a habit common to almost everyone. However, the successful ones are those who put away this habit and change their mind to seek wealth in the long term. Trying to get rich overnight is a habit that can dissuade you from the required patience to get the financial stability. So, it’s vital that you put an end to this habit. You don’t want to start a business or invest in a stock to earn big the next week, months or even a year. Investment is meant to be long term. Warren Buffet, who is one of the most successful investors, said, “if you’re thinking about owning a stock for ten years, don’t even think about owning it for ten minutes”. This simply means that you should throw away the idea of jumping in and out of stocks. Instead, you should focus on what stocks will bring you the big profit over the next fifteen years or more.
Habits 2: Letting someone else invest for you
There can be a lot of disagreement regarding this habit. In fact, many investors recommend that you let someone else invest for you. Nevertheless, the reality doesn’t go in that direction. It’s an unarguable fact that no one will care for your financial future as much as you do. So, you can’t expect them to prioritise your success as much as you do. The higher percentage of people you are likely to meet are those that will mismanage your money, and most of those that have deep knowledge and can help you will not be ready to take your money to invest. Even if you find the good ones, it can never be compared to taking control of your investment by yourself. Moreover, financial advisers will get paid whether they perform excellently or not. You should never forget that the best investment is the one that you make in yourself because no one can take it from you. You can also learn to do your research, analyse and evaluate the market, and conclude which stock is best for your interest and money. If you take your time to do the needful, you’ll realise that investment is not rocket science. Another bad result of giving your money to financial advisers is that you will be putting your money into something you don’t even understand, which can be one of the most expensive doors to financial failure.
Habit 3: Extreme diversification of portfolio
You must have heard investment advice one time or the other, buying you into the opinion of diversifying your portfolio. This is absolutely good advice. But the hype around it has oversaturated the air that people are now above-board trying to diversify their portfolio. Intelligent investors frowned frankly at this idea. You’re only expected to diversify your portfolio when you don’t have enough knowledge on how to invest. Diversification is not the way to get the significant result you want. It literally means you’re trying to avoid calculated risk. When you avoid risk, then you won’t make it big. Wise investors do not invest in all companies. Instead, they figure out the few that can get them a good return, do their research and head in with their money to invest. That’s what you should also be doing. You should consider any stock you want to buy as though you want to buy the entire business. That way, you will observe your due diligence to be sure of the positive result in competition, management, and performance in the future before putting in your money.
Habit 4: Selling based on emotions
Human decisions are mostly based on our emotions and most often lead us to make the wrong decision. So, dealing with your feelings to put your logic into work is an essential element in investment. When you don’t have proper logical reasoning, you’re most likely going to be jumping in and out of stock at the wrong time. Markets will always fluctuate, and if you are too emotional, the ups and downs of the market will continue to control your actions, which is not suitable for your investment. The point is that you should make patience and proper logical observation essential ingredients in your journey as an investor.
There you have the bad habits that can cost beyond expectation on your investment journey. You should stop expecting to get rich quickly, transferring investment responsibility to someone else, over diversifying your portfolio and when you stay away from these mistakes, you have more chance of succeeding with your investment.
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Recommended books for further reading:
- Investing QuickStart Guide: The Simplified Beginner’s Guide to Successfully Navigating the Stock Market, Growing Your Wealth & Creating a Secure Financial Future
- Investing Demystified: How to create the best investment portfolio whatever your risk level
- The Five Rules Successful Stock Investing: Morningstar’s Guide to Building Wealth and Winning in the Market
- Rule #1: The Simple Strategy for Successful Investing in Only 15 Minutes a Week
- Smarter Investing: Simpler Decisions for Better Results
If you are looking to open an investment account, follow these links below:
- Passive income
- Silver & Gold coins
- Interactive Brokers
(‘68% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.)