Successful investors will tell you the one thing that makes them profit consistently, and that is – It boils down to your investing habits.
Habits are a set or regular practice, something that is especially hard to give up. The outcome of whatever we do boils down to habits.
Let me now reveal to you the 5 habits of a winning investor.
Habit 1 – Do Your Own Homework
Just imagine, if someone asks you for $10,000 for a business opportunity, will you part with your money without questioning? Of course not!
Likewise, when investing in a company, you have to do some homework.
Doing your homework simply means finding out more about the company you are about to invest in. Reading the annual reports, doing your own analysis and research, understanding the company’s business model and their competitors.
This is an important starting point for every investors. Will you invest in a company you have zero knowledge about?
Investing in a company without doing your homework is a huge disaster waiting to happen.
Habit 2 – Set Up A System For Yourself
A successful business has its own systems in place to ensure the business run smoothly and to rectify any problems that may arise. Likewise, successful investors have their own investing system that they follow religiously.
A simple investing system may comprise your personality, your risk tolerance, the knowledge of the companies you are investing in, your buy and sell strategy. You can tweak the system till it works best for you.
Habit 3 – Consciously Avoiding The Herd
Investors who follow the crowd rarely make money. When you follow the crowd to invest in a stock, do you know what are you investing in? Usually the herd mentality investors are the ones who are afraid to miss out the “hot tip” or the “hot stock”.
Habit 4 – Admitting And Learning from Mistakes
What separates a winning investor and a losing one is the ability to admit mistakes and learn from it.
Successful investors take responsibility for their own actions and constantly treat mistakes as a learning lesson, while losing investors are constantly looking for a quick fix without reflecting on what went wrong.
Habit 5 – Investing In What You Understand
How do you increase your chances of becoming a winning investor? Do you swing at every pitch? If your answer is “No”, you’re on your way to becoming like successful investors that only invest within their own circle of competence.
For example, between a food and beverage company, and an oil and gas company, which company’s business model is likely to easier to understand?
Investing in something you understand greatly eliminates the risk of losing money.
Share these important habits you need to become a winning investor!