Investing is an art that requires time, practice and dedication to yield the desired results. Portfolio planning requires considerable experience and knowledge to get the desired results and maximum returns. You need to evaluate and rebalance the portfolio when required to alleviate risks and seize market opportunities.
A diversified portfolio is best poised to generate returns and build value. If you want your investment to hold value and give excellent returns you will have to ensure that there is a healthy allocation in all asset classes – stocks, bonds, real estate, commodities and cash. Diversification will also help your holdings have an edge against risk and inflation, and if need be you can sell silver and gold holdings in a jiffy to raise money.
A smart investor needs to inculcate even smarter investment habits. A frugal mindset alone will not help you make a pile of millions by the time you retire. And since only a handful of people down history have learned the art of timing the market, we need to build on other more achievable skills.
Here are a few tips for you to become a market-wise investor. The earlier you pick up the best investment habits the easier it will be to achieve your investment goals.
1) Automate Your Savings
The first rule in smart investing is that you must contribute to your portfolio growth consistently and regularly. Automate your contributions so that you do not have to find time to pitch in every month.
The money you put into building your portfolio is actually your savings, and automating this activity is the best thing you can do for your portfolio. Online transfers and automatic payroll deductions will help you put your savings on auto mode.
Successful investors, no matter how rich they are, always make it a point to save a portion of their earnings and invest it routinely. Regular flush of funds is necessary for your portfolio to build value over time and grow.
2) You Cannot Be Scared of Risks
Investing does involve risks and investors are not afraid of them. A certain amount of risk is present while trading in markets and that is a fact of life that you cannot avoid.
If you look at history some of the most notable investment successes have come on the back of massive risks. Peter Thiel was investing in a small and unknown platform when he sank half a million dollars into Facebook in 2005. Exactly 7 years later, in 2012, he sold 80% of the shares he owned for a jaw-dropping $400 million. If you see an A-grade investment opportunity you should be able to risk the chance of a drawdown on your account as well because it might just be worth it.
Smart investors know that you have to risk something in order to capitalize on a golden opportunity, so you too must be mentally prepared for the challenge. And this is the very same reason why active investing is not everyone’s cup of tea.
3) You Need to Have a Greater Purpose to Work For
Respected and well-known investors have solid and well-defined goals which they strive to achieve. It has to grow with time and a comfortable retirement cannot remain as your only goal. You may want to build value for individual investors who have believed in your vision, a better life for your dependents or maybe you aim to do something specific for your community.
A clear, relevant and inspiring goal will help you sweat it out, struggle and survive the painful entrepreneurship period in stock market trade. You will also not lose your way when you finally begin to taste success.
Powerful motivations are essential to keep you from straying and help you remain focused. Active investing is not a 9-5 job, you need immense self-discipline and dedication to succeed here.
4) You Need to Have Superior Self-Belief
As in business, your self-belief and confidence are integral to your investment success. You need to keep faith in your bets and not be swayed by market hype.
If you are just starting out this might seem easier said than done. But the fact is that it helps if you choose the beliefs you want to have and wear them to work every day. Gradually they will become a part of your value system and you no longer will have to struggle to acknowledge them as true.
The best part about adopting positive belief structure is that it gives you a framework to carry out your functioning and channel your thoughts.
Investing is a game where you are responsible for making the rules. A lot rests on you and a successful investor accepts this responsibility without hesitation. Investing is a solitary job where you have only yourself to talk to, so you better keep the voice inside your head positive.
5) Invest in Yourself
Self-made investors know that the entire game revolves around them, their skills and their abilities. It is for this very reason that successful people in this field spend less time worrying about the market and more time on improving themselves.
They do this by getting formal training, joining skill development courses, and becoming member of investing communities and industry bodies that are made up of like-minded people. This helps them develop a better and wider perspective of their profession and get acquainted with both the upside as well as the downside of their job.
Health should be made a priority and you should have systems in place that will help you deal with the stress that come with investing. Practice yoga and meditation, and work out regularly. A fit body will also help you have a fit mind.
6) Believe in Prayer
Humility, gratitude and simplicity will help you find inner peace. Gratitude also keeps arrogance, greed and over-confidence in check.
The power of prayers is hard to explain but it may help if you know that you can never time the market right every time. You do not have control over many factors. Believing in a power superior to you and entrusting the outcome in His hands will help you cope with stress better.
Even Sir John Templeton has listed beginning with a prayer among the rules for investment success.