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Navigating through the world of direct investing can be tricky, not all paths are paved with gold. Using these 7 simple habits will improve your chances of long-term investment success!
1. Define your investment goals Every investor has a set of objectives at the back of their mind, but top investors define these from the outset and select and measure their investments based on these desired outcomes.
2. Thorough Research Successful investors take the time to conduct thorough research into potential investments. They know the more they understand about the opportunities that are available, the higher the likelihood that they will make investment decisions that are right for them.
3. Understand Risk The most successful investors are able to evaluate the risk involved, balance this against the potential reward in the context of their investment portfolio, and make a decision based on these considerations.
4. Keeping Fees to a Minimum Warren Buffet’s golden rule. Fees may seem small initially but these compound and lower the overall performance and value of a portfolio. Astute investors keep a close eye on fees and invest efficiently. An example of this would be using low cost index funds in listed markets.
5. Be Patient & Calm Patience is paramount when it comes to investing. Long term investors understand this, they are confident in the quality of their investments and are not panicked when there is short-term volatility. In fact the best investors see opportunity when others around them are panicking!
6. Rebalance Periodically Rebalancing a portfolio is a critical component of good investment planning. No two investments will move in line, so as the market fluctuates the composition of the portfolio will also change. The best investors think back to their goals, adjust their portfolio periodically, and, if needed, diversify.
7. Reinvest Profits Successful investors know that in order to maximise the power of compounding, profits must be reinvested. This is especially true in a low interest rate environment when returns from holding cash are historically low (nearly non-existent).