5 Traits of a disciplined investor
Starting
an investment portfolio, be it big or small, requires some form of
commitment from the prospective investor. Most importantly, the investor
needs to have
a goal in mind before starting to invest.
Aneesa
Razack, CEO of FNB Share Investing, says “It’s quite common that people
start investing without having established the
reason or aim for starting an investment. Having a clear investment
strategy helps in setting goals and timelines. It also helps you to
understand your risk appetite and most importantly, the amount that you
can afford to put away.”
“The
market is replete with different types of investment products; however,
choosing a suitable product may be daunting for
the novice investor. In this instance it becomes all the more important
to seek expert advice from a qualified professional,” she adds.
Here are some key personality trains of a disciplined investor:
Persistent
It’s
important to understand that investing is not about quick returns,
therefore patience plays a big role. Simply because the
market is down at a particular time does not mean that things will not
change. It’s important not to act on a whim and decide to sell. For
example, investing in stock shares comes with a degree of risk and it’s
the nature of shares to fluctuate from time to
time. Therefore reacting to short-term market jitters could negatively
impact your investment.
Focused and goal oriented
When
investing, have a goal in mind and know what you want to achieve over a
set period of time. Having a goal deters one from
making impulsive decisions such as deciding to sell to use the money
for something else. It’s important to stay focused on the end goal, if
the aim is to stay invested for five years then it’s best to remain
committed and stay invested for the long-term.
Disciplined
Never
make the mistake of responding to hearsay about the market, people have
different opinions about which direction the market
will take. Discipline means sticking to your strategy or only changing
it based on informed opinion and not on rumour. It’s important to use
reliable sources of information and not rely on ill-informed friends and
family.
Committed
Deciding
to invest means there’s an amount of money that has to be directed
towards the investment on a monthly basis. For Example,
FNB’s Top 40 Exchange Traded Fund (ETF) is a threshold for anyone to
enter the stock market, at only R300 a month the investor is given
access to invest in the 40 biggest companies listed in the JSE. It’s
important to ensure that a sum of money is allocated
on a monthly basis towards the investment.
Resilient
There
are times when the market will plunge and lead to some losses. It’s at
such times that the investor’s resilience gets
tested and those who panic might react. It’s important to remember that
the market goes up and down frequently. In the long run, there’s a
better chance of making gains when one is in it for the long haul.
“Investing contains both risk and reward. While there are various factors that could determine the rewards, the attitude of the
investor also plays a big role in their ability to evaluate the associated risk they are willing to take,” concludes Razack.
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