There are plenty of investor’s mindsets around. With different types of investing styles, it is hard to conclude what is the best investment strategy out there. Even with different styles, we have found out there are certain mindsets that are consistent among the highly effective investors. Most of them would usually have at least 7 of these mindsets.
#1 – “My returns went up after my ego died”
Highly effective investors know when to admit when they are wrong. They know when to cut their losses when they feel that their investment strategy has turned sour. The most successful forecasters are the ones that change their forecast the most.
(Learn how to: investing in high quality stocks)
#2 – “What is my maximum risk?”
Most investors out there usually ask the wrong questions and therefore get the wrong answers. “How much can I earn from this trade?” While this is an important question, highly effective investors usually know what is their downside. They know that they will never be correct 100% of the time. Therefore, they want to understand and know what their maximum lost they can afford to take. Better to fight another day than to lose the war not.
(Learn how to reduce risk using a time proven strategy: value investing bootcamp)
#3 – “So what is the strategy that you are using?”
Highly effective investors know that there is no best strategy. Different time period calls for different strategies. While you might be well versed in using one strategy, you can might be able to profit well in one kind of market conditions. Highly effective investors ask around and adapt other people’s success into their own.
(Learn another strategy: Dividend Mastery Programme)
#4 – “How much money am I saving this month?”
Highly effective investors know that in investing you need capital. The higher your capital, the more strategies you will be able to do at any one point. The higher your capital, the more stocks you can buy and profit from it. While knowing investing strategies are important, the missing part of the picture is always how to fund the investment.
(Learn how to: Financial Excel Cheat Sheet)
#5 – “What happen if I cannot save anymore?”
What happens if you are unable to work, save or invest anymore? What happens if a critical illness were to strike and affect everything that you already know. Highly effective investors know that some things are out of their control. They will go all out to control those things that they can and hope bad luck don’t comes into their way. They know how to use financial products such as insurance to reduce their downside.
(Learn how to: Financial Planning (Singapore))
#6 – “This is why I’m into this position”
Highly effective investors know whats they are doing. When you ask them why they open a particular position, they will be able to tell you why, what and how they are doing it. Some that are not sure why they are into an investment are usually gambling.
(Learn how to: Stock Investment Framework)
#7 – “I have some positions in here and there”
Highly effective investors know that investing is not rosy. There will be highs and lows. Every sector or every industry will have it’s good days and bad days. They know when to diversify and spread their risk so that they will not be hit by any one big drop.
(Learn how to: how not to lose money)
If you believe that you will fail, you definitely will fail. Someone who have a driving licence but afraid of driving a car will crash a car more often than not. It is the same for investing. Someone who know how to invest but have a wrong mentality will get burn in the market more often than not. Some people says that mindsets are the fundamentals of everything we do. Indeed, that sets the difference between a highly effective investor and an average one.
In Journey with money, we want to empower individuals to retire early and avoid financial pitfalls such as this. Such a financial pitfall will delay retirement by at least a decade if not forever. If you already have done financial planning (singapore) or have a financial planner (singapore), that’s fantastic. You should be proud that you have taken the first step. However, there are many still unaware of this. We will like to offer our readers (even if you have a plan already or not) a free program Financial Wizardry Program (<—click here) to push your finances to the next level.
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Here is a video about mindset by one of the most successful investors in the world.