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5 Habits of Highly Successful Investors

5 Habits of Highly Successful Investors

Have you seen how a few individuals appear to ascend to the highest point of their field or wonder why some investors like Warren Buffett turn into billionaires while others consistently achieve the same “average” results?

Investors turn out to be enormous not just through splendid purchasing decisions or on account of a sizable retirement fund or through some financing companies. They also have great propensities that are profoundly instilled into their framework.

It’s not a fortuitous event that certain investors discover the triumph while others never achieve their goals.

There are sure attributes that without a doubt set investors like Mr. Buffett separated from the average investors… they essentially do things another way.

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To venture into the shoes of a fruitful and successful investor, you should first start to think and act like them. This implies understanding their habits and applying them to your own particular approach.

Here are seven habits of highly successful investors.

1. They do research

There are abandon of studies, observation, and analysis available everywhere, including TV, internet, Wall Street Journal about investment.  Before investing in a company, use the product, study the business. The better you understand the business, the more confident you’ll feel about your investment.

Successful investors have the accurate reason behind every stock buying or selling decision and it’s not because they heard a TV analyst pushing the stock as a buy.

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In order to reach your investing goals, you must take the same approach with your own portfolio.

2. They understand the business

There are tons of organizations to invest in and lots of them might have the potential to be a good investment option, but that doesn’t essentially mean you should invest.

Why would you like to invest in a technology company if you don’t know anything about tech?  Do you understand how to evaluate the next mobile app or the technology trends that will impact the business investment? Stick to what you know well.

If you’re detached with the business and their products, and the industry in which they operate; it will be harder for you to make smart investing decisions.  Successful investors always invest in what they know and focus their investing efforts within their circle of competence. For example; Warren Buffett doesn’t invest in technology stocks, because it’s simply not where his competence lies.

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3. They have a diversification strategy

Diversification is important. You cannot be a successful investor if you’re putting money in just two or three companies. To be a successful investor always determine how much you want to allocate to each class and then diversify your investments to reduce risk and increase your odds of success. Successful investors are best at diversifying their ideally distribute risk. Keep in mind, the foundation for making fruitful investing decisions is knowledge and analysis of the business and the industry. The more knowledge you have, the better decisions you will able to make. Every successful investor has a well-defined investing strategy and they stick to this strategy. While some successful investors like Warren Buffett prefer the portfolio focus strategy.

As Warren Buffett said “Diversification is a protection against ignorance. It makes very little sense to those who know what they are doing.”

4. They think long-term

Terrible decisions sometimes are taken when we become emotional and involve in short-term thinking. When it comes to investment –be patient—Think long-term. It means having the patient for months and years, not just for some hours, days and weeks. All the successful investors are very patient to see the triumph. When they make an investment after doing their calculations on a business, they are ready to wait to make sure their plan materializes.

5. They learn quickly from their mistakes

When an investor discusses experience, they are basically discussing the trials confronted, botches made, lessons learned and triumphs accomplished.  One can never become a successful investor without making some erroneous conclusions, miscalculations, or mistakes.
Successful commit errors yet they are not disheartened by these missteps because they know mistakes are part of the process to becoming a better investor.

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When we invest in the stock market, we may feel helpless – like outcomes are totally out of our control. But that is not essentially the case. By making wide-ranging smart decisions based on the habits and characteristics mentioned above, we can add discipline to our investment decisions and avoid financial catastrophe.

Featured photo credit: Ma_Co2013 via flickr.com

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Published on September 17, 2018

How Being Smart With Your Money Leads to Financial Success

How Being Smart With Your Money Leads to Financial Success

Achieving financial success is not something that just happens. Maybe if you win the lottery or something, but for the average person like you or me, it comes from a series of small steps you take over a long period of time.

With each step, you form a new smart money habit. And with each smart money habit, you build towards financial independence.

So what sort of habits can you form to get on that path? Let’s take a look at smart money habits you can start today to get you closer to a financially independent future.

1. Avoid being “penny wise but pound foolish”

It’s tempting to try saving a couple cents here and there when buying small items. However, that’s not where the real money is saved. You’re putting in extra effort for something that doesn’t move the needle.

You get the most bang when you’re able to cut down on your bigger bills. For example, finding a lower interest rate for your mortgage could save you $50+ per month. And cutting your transportation bill by purchasing a cheaper car or taking public transportation can provide large gains as well.

So, look at your recurring expenses such as housing, transportation, and insurance, and see where there’s wiggle room. It’s a much better use of your time than trying to pinch pennies here and there on smaller purchases.

2. When you want something big, wait

Impulsivity can get you in trouble in most aspects of life. Finances are no different.

It’s human nature to see something and want it right then and there. It starts as a kid in the checkout line at the grocery store, and it continues on through adulthood.

We get an idea in our head of something we want, and it’s hard not to go out and get it right then.

A good example is wanting a new car. Perhaps you’ve had your car for several years. It’s crossed the 100k mile mark. Maybe maintenance is due, and you’re annoyed that you need to replace the timing belt or purchase new tires.

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So, you get the itch.

You start digging around online, and you realize you could trade in your current car for something newer and more exciting… all for a few hundred bucks a month. Then you get obsessed.

Here’s where you have to take a step back.

Your newfound obsession is clouding your judgement. Rather than giving into the impulse, wait it out.

Set a timeframe for yourself. Maybe you come back to the decision three months down the road. See if the obsession lasts.

It might, but often, a funny thing happens. Often, you forget about it. And often, you find that the new car wasn’t a need at all.

The impulse faded. And you just saved yourself a ton of money.

3. Live smaller than you can afford

You finally get that big raise. And you want to celebrate – and why not?

You’ve been looking forward to this forever. And after all, it was all due to your hard work.

That’s fine, splurge a little. However, make it a one-time deal and be done.

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Don’t get caught in the trap that just because you’re now making more money, you should spend more.

Too often, people get more money and feel like they that gives them the means to buy a bigger house, a bigger car… you know the drill. Resist.

The fact is that living smaller than what you can afford is one of the fastest ways to build savings.

But if you constantly upgrade as you begin to make more, then you’ll never get ahead. You’ll just build up more debt along the way and have just as little wiggle room as before.

4. Practice smart grocery shopping

Food… it’s one of the biggest portions of any budget. And if you’re not careful, it can be one of the biggest drains on your wallet.

But luckily, there are a few things you can do to ensure that you stay smart with your money when buying groceries.

Create a grocery budget

Set a strict weekly grocery budget. When you know how much you can spend on groceries, you can then plan your weekly menu around it.

Once you know what all you need, you can go shopping and keep a running tally as you shop to ensure you’re on track.

I tend to do this in my head, rounding for each item. However, writing it down as you go would probably work best for most people.

Make a list… and never deviate

Never go to the grocery store without a list. If you go to the store with a ballpark idea in mind, you don’t have a true ide of what you need.

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You’re not well-researched. You don’t know what the sales are. As a result, you’re going to make decisions on the fly.

These impulse decisions will lead to overspending, which will derail your grocery budget.

Eat before going grocery shopping

It’s also important to eat prior to going to the grocery store. Hunger is a powerful force.

If you’re shopping on an empty stomach, everything is going to look good. In particular, you may find a lot of ready-made, processed snacks will look enticing.

After all, you’re hungry now and that food is easily available. So subconsciously, you may lean towards those items.

Unfortunately, not only are those items typically less healthy, but they’re likely more expensive. You pay for convenience.

However, when you eat prior to shopping, then you’ll shop with a clear mind. Your hunger won’t cloud your judgement, influencing you to make poor decisions like a cartoon devil resting on your shoulder whispering in your ear.

This makes it much easier to stick to your grocery plan.

5. Cancel your gym membership

Now that you’re all set on your food, it’s time to get smart about managing your budget in terms of physical fitness. And let’s begin by avoiding the gym. The gym bill, that is.

The average gym membership costs around $60 per month. That’s $720 a year.

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Yet, two out of three gym memberships go unused. That means two-thirds of people who have a gym membership are literally giving away almost a thousand bucks a year. It’s crazy!

I recommend seeking an alternative. One good alternative is to look into fitness streaming services.

Streaming services allow you to stream hundreds of workouts like Insanity and p90x, right in your own home for around $10-20 a month. That’s $40-50 less a month than the average gym membership.

Of course, then there’s the free option. The internet is full of free workouts that you can do on your own with minimal or no equipment.

For example, there’s the Couch to 5K program, that I personally used a decade ago to ease myself from couch potato to running my first 5K race. If I could do it, anyone could.

Then there are free resources like reddit that have limitless information on workouts. The Fitness subreddit has done all the research for you, populating workout tips and detailed workout routines for anyone to use in their wiki.

There are several routines that require no equipment. And you can join in on the subreddit to become part of the community, making it easier for those seeking comraderie and encouragement in their fitness goals. All for free.

It’s baby steps… And baby steps can start now!

I’ve never met anyone that can’t stand to be a bit smarter with their money. And on the flip side, anyone can get smarter with their money. But remember, it doesn’t happen all at once.

Begin by fighting your impulses. Prepare for the week and be smart at the store. And cut monthly expenses like gym memberships that are overpriced and you probably aren’t getting your money’s worth out of anyway.

The devil is in the details. And the details can change your lifestyle and prep you for a financially independent future.

Featured photo credit: Unsplash via unsplash.com

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