The nine habits of highly successful UK private investors

Investment is a tough business. There are so many parameters that you need to understand and there are constantly changing environments and factors in the macroeconomic and technical analysis fields that you need to take into the equation when you are investing. You need to get in at the right time and get out at the right time. Warren Buffet would say that it is all about judging value but that is no mean feat. In this article, we take a look at nine habits of successful UK private investors.

Setting goals

All successful private investors set goals and then strive to achieve them. Clearly articulated goals that are measurable help investors to focus and ensure they can track exactly how they are doing with their investments. There may be different goals for different investments, and different investors will have different risk profiles and, therefore, different levels of ambition for their average investment. The common trend is that all successful investors have goals which are time-limited and clearly defined.

A future time perspective

There is a psychology around the fact that as human beings we tend to judge our experiences with a focus on the future, the present or the past. The majority of successful investors tend to have a mindset that is forward-looking. Many investors became interested in investing money from an early age and most make good financial decisions before they even entered their career as private investors.

Comprehensive research

There are so many avenues for research these days, including the Internet, TV, wall street journal, Bloomberg, Financial Times and pundit commentary. Successful investors spend time delving deep into the investments they want to make, understanding all parameters, opinion and the analysis that has gone into the markets, including the ideal current account to operate. They can then fully understand the SWOT and potentials of the business, so they can judge value and make good buying and selling decisions.

Consistency

There’s no point having successful investment some of the time and then losing all of the investment profits in a few poor trades. Consistency is the key. Successful private investors work out their investment amounts each month and then consistently set up productive investments as a habit.

Risk-taking

Successful investors know that they can’t always make money in the same place. They will take a different approach to risk, depending on market forces, and will skip into different sectors when the time is right. They see investment opportunities and jump on them.

A self-control mindset

Successful investors will always be in control of their emotions and will control what they can, and not try to control what they can’t. If a situation in the marketplace changes then they will understand that their goals and plan may well have to adapt in order to meet a new market environment.

Diversification

All successful investors understand that unforeseen circumstances can happen. They, therefore, seek to diversify their investment portfolios in order to mitigate risk. Investors also understand that sometimes in difficult market conditions, profitable situations can arise and that some risk is often required even when everything else is going to cash.

Sensible withdrawals

Good investors understand that they should withdraw a proportion of their investment as profit and leave the rest. They won’t seek to draw out all of their investments when they are profitable, rather they will invest in the correct places and perhaps withdraw 4% per year, adjusting for inflation.

Having long-term plans

Successful investors understand what they want to achieve from their investments and will set long-term plans to achieve those goals. They won’t try and force the markets into conforming to their profit requirements. They will understand what they want to achieve over a period of 10, 20 or 30 years and what sort of growth rate they may require. This will help them in judging how successful they are, and ultimately this long-term plan will help them achieve their goals financial freedom.

Successful investors spend a lot of time learning the game, but many also have underlying traits that support them in their investment activities. These days you’re able to copy trade and find people to manage your funds, so if you don’t have the disposition for investment then look to someone that has.

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