5 Habits of successful investors

These habits aren’t complex tricks but rather a combination of discipline, knowledge and an ability to act well under pressure.

Whether you’re new to investing or looking to improve your strategy, adopting these 5 approaches to investing can help you unlock a more strategic and potentially rewarding investment journey.

Invest in what you understand

Investing in what you understand is key to financial success for several reasons. Firstly, it reduces risk because you are familiar with the companies or industries you’re investing in, which helps you make smarter choices. The familiarity also boosts confidence in your investment decisions and allows for better decision-making, leading to more successful outcomes. Plus, when you invest in what you know, you’re more likely to stay engaged with your investments, keeping a close eye on their performance and making adjustments as needed. Finally, investing in line with your values ensures that your money is supporting companies or causes you believe in, adding an extra layer of satisfaction to your investment journey.

Time in the market is more important than timing the market

Investors often hear that time in the market is more important than timing the market, and for good reason. Attempting to predict short-term market movements is notoriously difficult and can lead to missed opportunities or costly mistakes. Instead, staying invested in the market over the long term allows you to benefit from the power of compounding and the potential for steady growth. While markets may experience ups and downs in the short term, historical data shows that the overall trends tend to be upward over time. By remaining patient and staying invested through market fluctuations, you can capture the full potential of market gains and achieve your long-term financial goals.

Consistent investing is important

If at first you don’t succeed, invest, invest and invest again. By investing regularly over time, you can take advantage of the power of compounding, where investment returns generate additional earnings. This means that even small, regular contributions can grow significantly over time. Consistent investing also helps smooth out market ups and downs and reduces the impact of short-term fluctuations on your portfolio. Additionally, it instils discipline and helps you stay focused on your financial goals, whether it’s saving for retirement, buying a home or funding your child’s education. Overall, consistent investing is a reliable strategy for building wealth steadily and securing your financial future.

Creating a budget that allocates funds for investing is a good starting point. Consider automating your investments by setting up automatic transfers from your bank account to your investment account, starting with an amount you are comfortable with. Over time, you can increase your contributions as your financial situation improves. It is also essential to diversify investments to spread risk and maximise potential returns.

Balance risk

Balancing risk is essential for investors to achieve their financial goals while managing potential losses. Your financial goals should guide your investment decisions, and while investing always involves some degree of risk, the risk can vary depending on the type of investment and the market condition. By diversifying your investment portfolio across different asset classes, industries and geographical regions, you spread your exposure to risk and reduce the impact of market volatility on your investments.

Successful investors understand this balance and build their portfolios based on their investment goals, risk tolerance and time horizon so that it can align with their long-term financial objectives.

When investing, it is important to start by determining your risk tolerance and investment goals, and then allocating your assets accordingly. By considering low-risk options such as ETFs alongside higher-risk investments such as individual stocks or cryptocurrencies, you can strike a healthy balance between risk and potential reward and navigate the investment landscape with confidence.

Invest to build wealth, not pay bills

While covering immediate expenses is essential, investing is about more than having money to support your needs; it’s about building wealth and creating financial independence so you can achieve, experience and enjoy the things you want.

This requires a shift in focus from what you need in the short term to what you want to achieve in the long term. Your focus is on not only maximising your returns and growing your money but also building a financially secure future for yourself and your family without having to rely on debt.

Create and keep track of your investment goals in one place with the Save & Invest add-on on our Banking App.

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_{Disclaimer: This article is solely intended for information. It does not constitute financial, tax or investment advice or recommendation. Please speak to a financial advisor or registered financial professional before making any financial decision(s).}

_{Standard Bank, its subsidiaries or holding company, or any subsidiary of the holding company and all of its subsidiaries make no warranties or representations (implied or otherwise) as to the accuracy, completeness or fitness for purpose of the information provided in this article or that it is free from errors or omissions.}