While some follow their instinct, other investors learn how to navigate money and markets through years of practice. Given that there is no one-size-fits-all approach you could take to investing, aspiring investors often learn from the techniques of some of the greatest investors in the world.
Some techniques have been detailed in books and equations that can be studied, but often these tasking and theoretical ideas are outdated and only work if they are implemented by the minority.
Then, what can you do to set a fruitful path for your investments? Combining some of the simplest yet thought-provoking habits, we provide an amalgam of routines to incorporate into your daily life if you’re looking for success in your investing activities.
Habits of Successful Investors
Here are five habits most commonly found in some of the greatest investors.
1. Being Aware of their Risk Tolerance
A good investor knows what level of risk is acceptable to them. They know how far they can and want to go. Good investors make decisions without pushing themselves off the ledge with a degree of risk they can bear.
Accurately gauging your appetite for the markets takes work. However, looking at your past reactions to the market’s erraticness can give you a grasp of your emotions.
Further divulging into possible scenarios and playing them out before investing helps you know whether you should take an averse or bullish approach.
A good investor understands their boundaries and always acts within their comfort zone and doesn’t surpass their own risk limits.
2. Confident in Investing Emotion
Investing emotions comprise an investor’s attitudes toward the market before deciding where to invest.
This varies over a range of optimism, excitement, vitality, fear, denial, and reluctance. However, whichever stage an investor may be at, a good investor would confidently follow through with “what feels right.”
This emotion of almost absolute reliance does not form overnight but improves as your investments increase. With a better understanding of what you’re investing in and the more experienced you become, the gut feeling tends to be more accurate.
Learning more about the markets, especially their volatility and numerous failures over time, builds conviction in decisions among prosperous investors.
That certainty is a testimony to the experiences and success of an investor.
3. Volatility is Acceptable to Them
One of the most prominent features of the stock market is some level of uncertainty. Every investor should expect fluctuating stock prices, no matter how keen or risk-averse they are.
Not only is volatility something that investors should expect, but a good investor accepts and makes on-the-spot acute decisions that suit the situation.
Acceptability comes from revisiting the original financial plan during sudden changes and making necessary amendments.
Other means of embracing the volatility are diversifying their portfolios and increasing the emergency funds.
4. They ask Questions
One of the traits that all veteran investors agree on is that investors need to be curious. The habit of asking questions and digging to find answers yields great power in finding opportunities.
Curious investment managers are eager to continuously acquire information and expand beyond their boundaries.
Asking and being keen to answer more questions is how the greatest investors find new opportunities.
The same curiosity is aligned with news flow and absorbing the anomalies of this news.
All good investors have the willingness to discover what lies beyond their boundaries of knowledge, and they actively work on lowering that gap.
5. Diversity in their Investments
Good investors follow an approach along the lines of the world-renowned saying, “Don’t put all your eggs in one basket.” Savvy investors never place all their risks and convictions on a single asset or business.
If negative inflows pour from one investment by market irregularity, another investment’s return stream could act as a pacifier.
On most occasions, when all investments are operating smoothly, you can enjoy a return from multiple assets.
The Bottom Line
Many of these habits develop over time as you invest in different markets. Some of the most successful investors in the world have built their strategies and regulations around a fixed set of rules for themselves.
As long as you start with set regulations designed following your market behaviors and financial plan, the rest is mastered with practical exposure.
These habits can’t be put into practice by you until the intricacies of markets are experienced first-hand. Once an investor is familiar with the stock market’s behavior and their own, these habits can slowly come to fruition.
Josh is a financial expert with over 15 years of experience on Wall Street as a senior market strategist and trader. His career has spanned from working on the New York Stock Exchange floor to investment management and portfolio trading at Citibank, Chicago Trading Company, and Flow Traders.
Josh graduated from Cornell University with a degree from the Dyson School of Applied Economics & Management at the SC Johnson College of Business. He has held multiple professional licenses during his career, including FINRA Series 3, 7, 24, 55, Nasdaq OMX, Xetra & Eurex (German), and SIX (Swiss) trading licenses. Josh served as a senior trader and strategist, business partner, and head of futures in his former roles on Wall Street.
Josh's work and authoritative advice have appeared in major publications like Nasdaq, Forbes, The Sun, Yahoo! Finance, CBS News, Fortune, The Street, MSN Money, and Go Banking Rates. Josh currently holds areas of expertise in investing, wealth management, capital markets, taxes, real estate, cryptocurrencies, and personal finance.
Josh currently runs a wealth management business and investment firm. Additionally, he is the founder and CEO of Top Dollar, where he teaches others how to build 6-figure passive income with smart money strategies that he uses professionally.