Blog 7 habits of successful investors May 1, 2017 RSS

7 habits of successful investors

2may

We talk to and meet with successful people every working day.  These people are our clients.

Each week we have progress meetings with clients where we track their progress and discuss new opportunities and activities in their lives.  Often we need to bring energy to the table and inspire or motivate them to keep them focussed; however more times than not our clients inspire us with their passion, energy and drive.

Below are seven habits we’ve noticed that our most successful clients have in common.

1. They save money

Sorry to be Captain Obvious here, but if you can’t save money; you don’t have anything to invest.  To save money you have to have the capacity to say “NO!”

Someone over the weekend said that the gap between the wealthy and poor, between the ‘have’s’ and ‘have-nots’ is getting greater.  Often I think it’s the gap between those that say ‘no’ to things and those that can’t say no, is the reason for the gap.

Ironically, those that have credit card debt have been getting what they want.  They are on a trajectory to be a ‘have-not’.  Those that say ‘no’, are on a trajectory to have whatever they want.

2. They get started early

They don’t wait until they are 50 years of age to start ‘planning for the future’.  I have to tell you, one of the most frustrating phone calls for us to get is from a 50 to 55 year old who decides it’s time to get a financial plan.  It’s frustrating because most of the time it’s our job to pop a few bubbles, deliver the bad news and show such a client that the limited number of options they have because they’ve decided to start so late.

Time is the most valuable resources on planet Earth for so many reasons.  Investing is just another avenue that values time above all other things.  The earlier you get started, the easier it is.  If something is holding you back, work out what it is and defeat it.

3. They enjoy making sacrifices

We’ve already established that successful investors can say ‘no’, but when you delve deeper what you notice is that they actually enjoy it.

They enjoy it because they know that success is the sum total of a whole bunch of little efforts.  Like a marathon runner knows that it’s every kilometre that she gets into her legs, every extra 5 minutes spent pounding the pavement each Sunday morning that builds the strength that results in success.

Every ‘no’ is a step towards success.  It doesn’t mean saying no to everything (because this is likely to result in loneliness) a balance needs to be struck.  That balance is achieved by being clear about what matters and having a strong ability to recognise a distraction when you see it.

4. They have a passion (a talent or expertise) that keeps them busy

The most successful investors have something else other than investing and money to obsess over in life.  They have a talent, hobby or area of expertise that keeps them busy, occupied and entertained which means their time is spent somewhere other than a shopping mall or on their phone buying stuff they don’t need.

For the very successful, their talent or hobby is an avenue that they have such expertise in, that it makes them money.  THE most successful people I know get to a point where they don’t want more money but due to their talent, it just keeps rolling in.

5. They don’t waste time trying to beat the market

Successful investors don’t wander down to the ASX building each day to check on the value of the stocks. They don’t spend time online reading reports about companies.  They don’t study markets.

They let markets do what they do.  They realise that most fund managers fail at beating the market and so if these supposed ‘experts’ are failing – how on Earth can any of us expect to.

Successful investors don’t have a gambling mentality in this regard – which is probably another habit of successful investors – they’re unlikely to have a gambling app on their mobile phone.

6. They take advice

Successful investors know what they don’t know.  For all the reasons mentioned above, their time is spent better elsewhere so they seek and take advice for two important reasons:

  • For solutions and implementation. How to get market returns at a low cost, in a strategically structured manner so that they make the most of things and not look back with regret for getting it wrong – they could use a whole bunch of energy trying to work it all out themselves and still not be 100% sure that they did a good job.  Or they could seek advice.  They seek advice.
  • They use their adviser as a sounding board for investing and other financial decisions. To become successful, they have surrounded themselves with other successful people that they can learn from and benefit from their experience (and the experience of other clients that have been in their situation already).

7. They know what they want

Possibly the most powerful habit and why it is last on the list.

Successful people know what they want which means that they get started sooner.  It means that they’re willing to sacrifice small things for greater outcomes and because they’ve tasted success earlier in life, they can easily afford to pay for help which propels them even further ahead of everyone else.

If you don’t know what you want, a financial adviser can help you define it in any number of ways.

  • It might be our values conversation where we understand what is driving you.  Once your values are clear it makes decision making easier.
  • It might be our goal setting session which fleshes out what you really want to achieve.
  • It might be stories of success that we share about our other clients that inspire you.
  • Or it just might be another random question we ask that sets a light bulb off in your brain where it all becomes clear.

If you’re lacking direction, reach out for help.