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7 Habits of a Good and Wise Investor

July 11th, 2023 | Share via:

A good and wise investor is not just investing their money to provide for their future, but also to secure financial freedom. Regardless of whether you are young or old, an experienced investor or just starting out, there are certain habits you should cultivate to become a successful and wise investor. Here are five habits of a good and wise investor that you should make a part of every financial decision: 

1. Keeping yourself up-to-date with financial news.

To be a good investor, you need to stay on top of financial news. You should follow reliable sources of information such as financial news websites, investment blogs, and business newspapers. This habit will help you stay informed about the latest trends, changes, and developments in the financial world. This information will allow you to make informed investment decisions, and avoid making decisions based on emotions or hearsay.

2. Setting clear investment goals

Wise investors set clear investment goals for themselves or their families. Goals give you direction and focus. When you set clear investment goals, you will know what you want to achieve and the time frame in which you want to achieve it. 

3. Avoiding impulsive reactions. 

Wise investors avoid impulsive reactions to market movements. When you see or hear news about a specific stock or asset class, don't rush to act on it. Take a step back, assess the situation or decision carefully, and make a well-informed financial step with calculated risks. This habit will help you avoid irrational decision-making and improve your investment outcomes.

4. Sticking to a long-term investment plan

A smart investor always sticks to a long-term investment plan. Regardless of market crashes or short term interruptions, having a solid long-term investment plan will keep you focused. It allows you to have faith in the returns of your investments, and how it can generate the inflow of returns. This kind of habit as an investor requires discipline and patience.

5. Managing fees and costs

Fees are often overlooked by investors, but over time they can have a significant impact on your returns. A wise investor understands the fees involved in buying and selling investments and looks for ways to minimize the costs involved. With this kind of critical thinking, you can maximize your investment returns by focusing on your net returns instead of just the returns on paper.

6. Avoiding the herd mentality.

When it comes to investing, you don't want to be a part of the herd or go for what’s common. The herd mentality occurs when investors follow the crowd and make investment decisions based on what everyone else is doing. You cannot solely depend on this, and you need to make thorough financial decisions not just based on what’s trending, but also being well informed about that certain investment. Having a herd mentality is counterproductive and likely leads to financial risks that may lead to negative results. 

7. Learning from your experiences. 

Never stop learning as you go along. Successful investors learn from their experiences, both the good and the bad. Review your investment history and assess what worked well and where you may have made mistakes, and how you can improve. Try to assess yourself, identify your strengths and weaknesses as an investor, and refine your strategies so that in the future, you can make better financial steps as you go along your investment journey. 

What are the habits of a good investor that you need to improve? Share in the comments below!