Individuals feel a sense of loss when their friends speak about a particular recent investment that has given spectacular returns in a short term. There is the feeling to be remembered on hearing how a friend had always been a successful investor and how he weathered a bad phase in the market. We criticize them on their miserly ways behind their backs because we are on friendly terms with them. They could be colleagues, superior officer, some famous personality well, and people successful in making money.
They are not just born to succeed and these individuals have nothing special but they have just has an investment plan and they implemented it wisely. Most people look at successful investors as special people who are destined to make it big in life. This is a wrong way to look at things. If one looks at people who have made it big in life, he or she would find that they are mostly disciplined in whatever they do. Money making is not different.
It was always noticed that what makes a successful investor is his or her approach towards their financial goals. They are very methodical and disciplined in their approach. In fact, they are very happy to do that because, they say, it would give their average customers an idea that there is no secret formula for being a successful investor.
The main difference between a successful investor and his not so successful counterpart is that the former always have a plan for everything in life, including investment. The smart investor plans his investment carefully, while as the other opts for a random approach. Most people donâ€™t have a conscious plan for investing. They confuse savings with investment. If one has an investment objective and work towards it, it is always to succeed. For example, we normally save a fixed amount of money in our bank account and we think it will help us meeting a number of needs in the future. Instead of this, we can adopt a different approach. Identify different goals and allocate a specified amount of money for them regularly. To illustrate if one has decided to go for a foreign holiday with his family after five years, instead of putting the money in a general pool he must allocate a fixed amount for the purpose. He can start a systematic investment plan with a diversified equity mutual fund.
Discipline is the key:
Most of us succeed inputting a plan, but only a few succeed in its implementation. Most people start earnestly but fail to keep the enthusiasm alive for a long time. In most cases it is the lack of discipline to blame. They donâ€™t have disciplined approach towards investment or spending. Their impulsive spending habits may come in the way of allocating money regularly towards various investment goals.
An individual intending to invest kept postponing his investment plan because every month he would have one or the other unforeseen expense. Unless it is an emergency these unforeseen expenses are nothing but silly excuses. One just has to admit that he doesnâ€™t has the necessary discipline when it comes to finances.
From the story of a friend weathering a bad phase in the market, one can learn many things on investing. The story was about how bad his investment was faring for two years and how he put with the bad phase to emerge as a winner. This is exactly what many people fail to do; they often let the market dictate their investment. The investment advisor offers an example: when people see the stock market is performing well, they will pullout money from their fixed deposit to invest in stocks. When they see the market is on a downslide, they will again pull the money out from the stock market. This trend was observed for many years. Most people donâ€™t realize they have to go through the entire bull and bear phase in the market. Most people donâ€™t consider this except successful investors.