7 Investment habits of highly effective investors for Good Investing

For most investors, gaining success as an investor means attaining financial goals, like owning your dream home, paying for studies abroad, or having a large retirement kitty. Wondering how to do that? Read on.

One common thing between successful investors is their seemingly simple but effective investment habits. Here are 7 habits practiced by successful investors and how to make them work for you.

Create a financial plan

Investing is not only about generating wealth in the long term but also about attaining mid-term goals like going for a foreign trip, financing an academic career abroad, etc., in the way. So, when you start to invest in mutual funds online, note down all your short, mid, and long-term goals.

Besides, when setting a goal, for instance- purchasing a home, prepare an outline for the investment tenor, monthly savings that you’ll contribute to the financial plan, minimum ROI, etc.

Invest regularly

Successful investors understand the importance of investing regularly. The best way to be consistent in investing is through a Systematic Investment Plan (SIP). Here, you can easily park a fixed sum consistently regardless of the market conditions or the NAV. In fact, a Systematic Investment Plan helps you follow the discipline of investing every month.

If you get a raise or a bonus at work, give your monthly investment a raise, too.

Set aside funds for an emergency

Financial exigencies often come unannounced, and it’s prudent to prepare for them in advance. So, before you start funding your retirement fund, start by building an emergency cash reserve. Keep a minimum of six months of your monthly expenditure in a liquid mutual fund.

This way, you’ll have savings to tend to an emergency, which could be anything from your laptop refusing to function to something as serious as hefty medical bills. Also, you’ll ensure that your emergency reserve remains separate from your other investments.

Diversify your risks

Next in the list of 7 habits of highly effective investors is diversification. The objective should be to distribute your funds across multiple investment assets, including debt instruments, stocks, fixed and recurring deposits, mutual funds, gold, real estate, and more.

Diversifying helps keep your portfolio away from being too strongly weighted towards one sector or company. This way, you spread the risk and ensure that your investments are sound and protected in the long run.

Invest with a long-term view

When you start investing, focus on mid and long-term goals instead of chasing short-term returns. That’s because successful investors know that wealth is not created overnight. Besides, you must understand the difference between trading, which is short-term, and investing, which is a long-term strategy.

When you’re invested for the mid or long-term, short-term fluctuations in the market don’t stress you as your goal is fixed. This strategy also helps you leverage the benefit of compounding.

Invest intentionally

Smart investors focus on specific financial goals and invest intentionally. When you specify financial goals, it’s easier to come up with an investing strategy. For instance, if you’re planning to buy a house in 8 years, equity-focused MFs can do the trick. On the other hand, if you have to pay your child’s college fee in 3 years, debt-focused instruments and MFs will be suited investment avenues.

Start saving and investing early

Last but not least, other habits of successful investors are saving and starting your investment journey early in life. Since investors easily get caught up in the ups and downs of the market, it’s crucial to consider and act on how much of your income you’re putting away for the future. By saving early and frequently, you can make strides towards fulfilling your long-term financial goals.

Over to you

Investing can look complex, but following these effortless yet effective habits are key to creating and nurturing wealth in the long term. When looking for a one-stop solution to your investing needs, download the mutual fund app Moneyfy. Indulge in goal-based investment today!

Frequently Asked Questions

What are the 5 golden rules of investing?

The 5 golden rules of investing are: start early, diversify your portfolio, invest for the long term, set realistic financial goals, and review your investments periodically to adjust for changing market conditions.

What is the 70-30 rule in investing?

The 70-30 rule suggests allocating 70% of your money to low-risk, stable investments (like bonds) and 30% to higher-risk, high-return assets (like equities), balancing safety with growth potential.

What are the 4 principles of investing?

The 4 principles of investing include setting clear financial goals, maintaining a diversified portfolio, adopting a long-term approach, and managing risk through consistent review and adjustment of investments.