In his book, Atomic Habits, James Clear highlights the tiny behaviors that contribute to success in life, and these habits apply to investors just as they do to everyone else. James Clear’s perspective is that: “Success is the product of daily habits—not once-in-a-lifetime transformations.”Doesn’t it make sense? Sure it does, especially when it comes to investing successfully. We all want to be successful, but we need to acquire habits that drive us to investment success. James Clear proposes four steps to forming new habits required for successful investors. Let’s take a look at these steps.
Steps to building new habits that drive successful investments
1. Make it Obvious
Working people have the potential to save a certain amount of money either each week or every month. These savings can stretch from $100 to $1000 or more. However, it’s not the amount that’s matters; the issue is the conduct required to invest. James Clear suggests that the best habit is to make saving obvious.
Declare your objective, write it down, and then follow through on it every week. You’ve heard several times that starting to save early is an effective practice. It’s one of the habits that drive successful investors – they make saving obvious.
2. Make it appealing
Now that they have established a habit of saving, successful investors think about what it is about saving that appeals to them. Make a list of everything you want to do. It could imply that you have more money to invest. It may mean that you have the option of deciding how to invest this new and growing sum of money.
It could also mean that you are reminded on a weekly basis of how much control you have you’re your finances and investments. Make a list of as many positive aspects of your new weekly saving practice as you can.
3. Make it easy
How easy can you make investing?
For successful investors, it’s pretty simple. They make it a part of their lives. Doing so eliminates any conflicts of interest that could hinder progress.
4. Make it pleasurable
How rewarding would it be for you to set and achieve a savings goal? You may inform a close friend about how you’ve begun a new investment habit and how much money you’ve saved as a result. There is always a sense of accomplishment that comes from sharing your success with people who love you.
Focus on making whatever habit you wish to develop evident, appealing, simple, and fulfilling.
Top 5 Habits of highly successful investors
- Delay gratification
The habit loop, as defined by James Clear, is the cornerstone of this motivation. It all starts with a cue that triggers a desire. This incentivizes a reaction that leads to a monetary reward.
The most successful investors discover ways to do this again and over again in their financial lives. They know that the expense of good habits is now, while the cost of poor habits lies in the future.
- Rise above frustrations
Highly successful investors know that deferring gratification is a prudent strategy, and they always want to reap the rewards of good habits. What is even better, emotions do not derail the plan of successful investors. In essence, when consistency is difficult, successful investors find a way to push through the boredom, precisely when most others quit.
- Keep track of their spending
Successful investors know how to keep track of their spending patterns. They keep track of their behaviors which helps them bounce back faster after a temporary or perceived failure.
- Practice financial Self-control
Self-control is a key trait of successful investors. In times of uncertainty, maintaining self-control can be difficult. Setting up processes that don’t require tremendous willpower to overcome each time is a key to a successful investor’s secret. Fortunately, with the numerous ways to automate your savings, investing is a perfect antidote to this. Another option is to hire an expert to help you learn self-control.
- Reflect and refine their strategy
Highly successful investors refine and reflect on their strategy. It’s far simpler to manufacture excuses and develop misleading narratives around past investment strategy decisions if you don’t reflect on developments and challenges. When you take the time to reflect, you become more conscious of your past investment mistakes and identify areas where you might improve.
If you take the four steps to develop new habits, you can then get on the way to break things down into tiny habits that can lead to massive investment wins.
Making simple changes can have a significant impact on your life. When you close the gap between your objectives and your actions, you start to change your habits and move toward success. These ideas can help you become a better investor, and they can also be applied to other aspects of your life.
If you’re new to the world of finance and investment, Aikido can help you get started. To assist you in making informed and evidence-based investment decisions, we adopt a data-driven approach.