If you wish to make money, the right attitude matters more than talent and skill. You may design the sharpest strategies, but they will not work unless you stick to them. Successful investors do not just pave a rock-solid financial path but also have the patience and determination to follow it till the end. The characteristics that lead good investors to success can be picked up by anyone. Read this blog to know more about them.
5 Traits of Good Investors
Here are the five traits most successful investors have –
1. They Save First and Spend Later
Good investors always save first and spend later. It helps in keeping expenditures in check. It should be your first step in building wealth, and you can lock in your savings right at the beginning of the month by automating it. Set a standing instruction with your bank to deduct a specific amount monthly for your Recurring Deposit or Mutual Fund SIP.
2. They have a Strong Intellect.
The most successful investors also have a strong intellect. However, it can also be strengthened – just like talent. Work hard to enhance your understanding of the stock market and investing. Listening to and reading financial news can help build your intellect and talent. It will give you a glimpse of why people invest in certain companies and an insight into the economic trends.
Successful investors are inquisitive and understand it is better to ask questions than to get locked into a poor investment. They gain clarity on all the so-called fine print, including fees, exit charges and commissions, and everything else there is to know. They educate themselves by conducting independent research and checking back with unbiased sources before making a final decision.
3. They Understand and Accept Volatility
Good investors know that there are no rewards without risks. They do not stay away from volatility but spend time understanding the risks involved in an investment and accept a certain degree of volatility as “growing pains”.
Good investors are successful contrarians and follow the principle of buying when others are fearful and selling when others are greedy. They understand that their emotions, especially greed and fear, can act as their worst enemies and lure them into taking foolish investment calls. They don’t panic and rush to capitalize on momentum-based trends.
4. They Diversify Their Investments
Successful investors don’t put all their eggs in one basket and diversify their investments. They understand that different investment avenues offer varied returns and varied risk exposures. While equities are highly volatile, they fetch good returns. Debt instruments offer low returns with low-risk exposure. Real estate investment lacks liquidity but provides good returns with low-risk exposure. So, opt for a combination of different investment avenues rather than putting all your eggs in one basket while building your portfolio. It would ensure low exposure to risks while maximizing the returns you can get on your investments.
5. They Grow and Maintain Their Market Knowledge
Growing and maintaining your market knowledge is critical to be a successful investor. Following the financial news isn’t enough, you must also stay updated on current events. Look for the companies dominating the market and these market leaders. Watch CEO interviews regularly to enhance your understanding. If you take all of these actions consistently, you will be better informed about the factors affecting the market. It will also ensure that you avoid costly mistakes and can seize opportunities as soon as they arise.
Focus on These Traits to be a Successful Investor
We hope that the tips in this blog helped you understand the traits successful investors share. Go slow, and give yourself a few years to build those muscles and hone these traits. Becoming a good investor will seem easy when you grasp these traits gradually. However, remember to note your shortcomings and make amends whenever required.
Author Bio:
Naina Rajgopalan has a thing for numbers and a deep fascination to learn about all things finance. She’s been money-wise from a young age and has always shared her knowledge and tips with those around her. Being a part of the content team at Freo, a neobank that offers flexible and customised financial products, along with benefits such as insurance on balance, safe & secure banking, and so on, Naina stays updated with the latest of what happens in the banking and fintech industries. She has taken upon herself to share her knowledge with readers across all walks of life to help them manage their finances and budgets better, so they can make better decisions while spending, borrowing, investing and saving.
