There’s something to be said about witnessing someone who invested their way to financial freedom. It’s impressive, inspiring, and yes, a little bit envy-worthy, too. Anyone who’s seen the power of Wall Street has, at one point or another, wished that they knew how to invest like Ray Dalio or other Wall Street bigwigs.
However, finding good investment strategies isn’t the only thing you need in order to be a successful trader. Even finding the best micro-investment apps will only go so far if you want to shoot in the big leagues. No, if you want to have real success (as in millions of dollars), you will need to mimic the most common habits of successful and happy investors.
We decided to take a look at the most common habits top investors have. These tiny tweaks to your daily routine might just be what you need in order to make the most of your investing time and money.
They invest consistently.
One of the most frequently cited habits of successful and happy investments is the act of making a point to invest on a regular basis. This is actually one of the smartest diversification strategies for your portfolio, and it's called "time diversification" or dollar-cost averaging.
This investment strategy means that you will reduce the losses your portfolio receives during times of economic downturn. After all, when the market goes back up once more, you will end up earning more on the lower-priced investments.
They diversify while keeping costs down.
Let's talk about some facts first, okay?
The first fact that we're going to discuss is the need for diversification. Putting all your eggs in one basket is never a good idea. Doing so could lead to large losses. Obviously, it's wise to diversify your portfolio.
Both apps and investments have costs associated with them. Whether it's fees for transactions or fees for maintaining a fund, they can easily eat into the profits you're getting. It's also a wise idea to cut costs whenever possible.
Two habits of successful and happy investors include watching out for costs and making a point of diversifying their portfolio. It's simple, and so obvious, yet so few notice it.
They think about the long term, rather than try to get rich quick.
Oh yes, we would all adore having moments where we've fantasized about being the next Wolf of Wall Street. We've all wanted to just get a cut check for $4 million, just for being awesome. If this sounds like you, you're not alone—but you will be disappointed by what we're about to discuss.
You shouldn't be surprised to hear this, but one of the most noted habits of successful and happy investors is to keep things long term. Time is a huge multiplier in an investment's power, and that makes is a massive boon to investors.
The longer you hold onto a good investment, the better your returns will be. This is one of the cornerstones of learning the ways to invest like Warren Buffet. After all, he's the one who famously said, "Our favorite holding period is forever."
They also don't watch their portfolios like hawks.
Right now, we're talking about the habits of successful and happy investors. You know what doesn't make anyone feel happy? At all? Panicking because of minor dips in the stock market.
Watching your portfolio like a hawk will do nothing but encourage you to make foolish decisions, panic-sell, and just get yourself feeling anxious and miserable. Take a deep breath, grab some ice cream, and relax.
More often than not, it's better to stay the course and avoid looking at every little spike and dip than it is to obsess over it. This is the best thing to do when stocks start to drop, too.
Keep your portfolio reviews to a once-a-month session, and you'll likely be a lot happier (and way more relaxed) while you invest in the stock market.
When they DO review their portfolios, they do so in-depth.
The habits of successful and happy investors are actually rather simple, if you think about it. They tend to be believers in doing something right, rather than doing something frequently.
This is why top investors, when they do their portfolio reviews, tend to look at all the indicators that can tell them whether to buy or sell, and also look at the stock's performance. This way, they can sell poor performers and enjoy the good returns they're getting.
Unlike many others, they never attempt to "time the market."
Much like avoiding focusing on short term gains, most top investors you'll hear about aren't looking to time the market. Though a lot of the best stock market trades in history did involve timing the market, the vast majority of investors will end up hurting themselves if they try that.
Rather than worrying about timing things, it's often better and wiser to just sell when you feel you should sell—or better still, just hold onto your goods.
Numbers back this up, too. One study showed that people who would have held onto S&P 500 shares would have had around 4 percent more profit than if they had tried to time the market.
Sure, once in a while, a lucky investor will be able to time the market, but is that really a good idea? Probably not good enough to bank on it.
They buy when the market's dipping.
This is one of the most obvious habits of successful and happy investors. If you want to make money, you don't always buy stocks when you're in a bullish market. Bear markets are great for bargain stock buying, and when the market recovers, you're almost certain to get nice, juicy profits.
Though you'd think people would realize the benefits of buying up shares when the chips are down, fear that they will end up losing money often keeps them from doing it. That's often why people get burned by the market.
They also don't get emotions involved.
Hard as it is for some to believe, investing in the stock market is never supposed to be an emotional ordeal. One of the habits of successful and happy investors (or perhaps, one of the outcomes of other habits), is the fact that they don't get stressed over their investments.
If you're getting emotional over your investments, it's time to take a step back. Money is money. It's a matter of business. The market will eventually pick up again. Just do whatever you can to come up with a way to calm yourself down.
They do their homework on both investments and investment strategies.
Would you spend money on a product you didn't know about? Of course not, so why would you do the same on investments? Warren Buffett makes no small deal about one of his most cherished habits of successful and happy investors.
That habit, of course, is to never stop learning. Buffett himself reads around half a dozen newspapers a day to find out more about stocks, news, and other important things. Many other top investors enjoy reading books that have a proven track record of good advice.
One of the most popular books about investing out there is The Intelligent Investor by Benjamin Graham. It's a book Buffet, Dalio, and many other top stock traders swear by. If you're looking for a good place to start, this book is a great pick.
Finally, they also invest in themselves.
Here's one of the secret habits of successful and happy investors you might not have seen coming. They realize that money only can go so far when it comes to getting happy. They invest in experiences, knowledge, and of course, things that help improve their overall quality of life.
Money is great, but remember that you're greater. Invest wisely and your life will be a fun one.