There is a big difference between knowledge and wisdom. Let us not waste time in differentiating them here, you can refer to a dictionary. One may have all the financial proficiency but still may make appalling decisions when it comes to investment planning. On the contrary, some people are almost zero when it comes to financial literacy, but they make huge profits out of their investments.
Wise investments decisions are habit or behaviour. In other words, its wisdom! As per various studies, successful investors have a defined behavioural pattern. Here a few aspects that one can emulate from successful investors to make rich profits out of their investments.
They follow Well-Defined investment strategy
Most successful investors have well thought of, researched and a clear investment strategy. They divide it based on period, allocation and never put all eggs in one basket.
Smart strategy leads to investment discipline and long-term gains. Despite all the noises around, a successful investor follows a disciplined investment strategy. Investment strategy serves as their guiding light to traverse in uncertainties.
Emotional Discipline and Critical thinking
It should have been put it in the first place. Lacking emotional discipline means playing in the hands of rumours and tittle-tattle. This leads to wavering thoughts and action. This can stray you from following your investment strategy.
Therefore, successful investors do critical thinking before making any investment decision. For instance, smart investors do not stick to a loss-making investment. It is not like “It was my first house; how can I sell it on loss?” If there is no long-term positive perspective, if it is bleeding then pull out the money and invest somewhere else.
They keep learning
Successful investors, financial planners are voracious readers. They make a point of learning a new financial aspect, emerging investment options. They do not wait for others to tell them. They keep themselves abreast of the latest.
Regular learning and knowledge upgrading keeps them ahead of others and makes smart profits before others. Learning enables them to avoid repeating a mistake. Remember a famous proverb that a wise man learns from others mistakes.
They are possessive of their assets & wealth
Successful investors know that Money is Power and they not only love to acquire it, they also fight hard to safeguard it. They know that it is their hard earn money. Therefore, they are protective of their wealth.
Now, what does it mean? Being protective does not imply that they pull out swords and guns to fight others. It means that they ensure that their wealth is not eroded due to inflation, market risk or unavoidable exigencies.
They are prepared for all emergencies and carry plan ‘B’ in case any investment decision goes haywire.
They make their path
Successful investors do not have sheep mentality. They are independent in their thinking and actions. They make their own path. During the first world war, Ghanshyam Das Birla invested heavily in jute capabilities as he figured out that it is the product of the future. Dhirubhai Ambani saw a fortune in petrochemicals. Dhirubhai’s elder son Mr Mukesh Ambani found data as the new oil. Hence, when all the other telecom companies are bleeding, Reliance Jio is in profits.
They have the zeal to take the risk and flow against the tides. Shakespeare said that There are tides in the affairs of men when they take head-on, they rise.
They are there to stay
Successful investors think long term. They have a big picture in their mind and are not perturbed of short-term hick-ups. After all, they are they have to play longer innings.
Please remember winning in investments is all about staying for an extended period. They are not in a hurry to become rich overnight. More than making money, they think of creating wealth. Wealth creation leads to the overall development of society. Look at Warren Buffet, he creates wealth, and he does not think twice before doing charity. That is how they achieve their goals.
They are swift movers
Successful investors do not suffer of inertia. They are proactive and never believe in procrastination. They believe in the faster rotation of the money as they are aware that more the money rotates, more they earn. Moreover, they know the advantage of acting in time. For instance, mutual funds, SIP should be plan at an early stage of carrier.
Let’s wait here for a bit long. Those who start investing in SIP at a young age, and continue doing for a long per; they have earned higher returns than any average investor.
The mantra is that they do not let their money take rest in the banks, lockers. They put deploy it to achieve their goals. And this makes all the difference in the game. They hate losing money in penalties, fines and unnecessary taxes.
They hate to overspend
They are wise in their spending habits; they hate to over-spend. They are tough negotiators and love drawing the maximum out of every deal. They hate to spend even a penny extra.
Narayan Murthy, the poster boy of that Indian software industry, is known to live his life in a very modest way. Robert Kiyosaki’s famous book-Rich Dad, Poor Dad perfectly exemplifies this behaviour. He mentions that a big house, a big car is a liability.
Lesser wasteful expenditure results in higher savings and thus there are higher chances of earning higher returns on the money saved and invested.
Is not Warren Buffet right when he says that Expenses= Earning-Savings.
Though there are many other aspects too, I have tried to cover some of the behavioural patterns of successful investors and hope you will learn a bit from it. Remember to make your best moves when it comes to investment planning.