We are always impressed by successful investors who earn a fortune from saving and investing. What are their six key habits that have been proven time and again? Keep reading this article to find out!
Follow the Plan No Matter What
What happens to an ordinary person when he sees his investments are in threat due to a market shake-up? He panics and runs to sell all of it to avoid losses. Meanwhile, the best investors understand the financial capacity of losses and face market ups and downs with emotional tolerance. Moreover, they maintain an allocation of stocks when the market is both good and bad.
Let’s recall the financial crisis of late 2008 and early 2009. Stocks dropped nearly 50%, and most investors went to the sidelines. Those who stayed calm and invested in the stock market during the downturn eventually saw their account balances grow 147% in 2017, according to a Fidelity study of 1.5 million workplace savers. This amount is twice the balances of those who moved out of stocks and into cash during the financial crisis. Additionally, more than 25% of the investors never came back into the market, and the vast majority of study participants didn’t allocate their assets, which could have brought them more profits.
It is not that easy to keep calm when there’s a market shake-up. If you see the market plunge, the best decision is to allocate your assets to a more balanced and less volatile asset mix — for example, a 60%/40% split of stocks and bonds. This decision will let you gain more than investors who slash their equity allocations from 90% to 20% until the market recovers. Disciplined behavior brings more profit than aggressive behavior.
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