Six habits of successful investors | North Loop Official Blog
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30 Nov 2020

Six habits of successful investors

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People often confuse investments with savings and have an opinion that both can be used interchangeably. However, savings help individuals set aside a lump sum amount of money for the future, and investments help individuals build their wealth.
Investments are often done in various instruments such as stocks and bonds and have the potential to earn strong interest rates.

Some of the most successful investors in the world are not the ones that make money by kicking off their investments with a vast sum of money, but are ones that invest smartly.
Here are six habits of some of the most successful investors in the world and how these habits can help you build your financial worth.

1. Financial Plans-

Laying out sound financial plans helps you establish a proper roadmap ahead and can prove to be crucial in reaching your investment goals. Personal financial planning can help you figure out your risk appetite, investment tenure, and the type of investment vehicles to invest in.

Investors usually invest money to achieve short term or long term goals, and research shows that investors equipped with proper personal financial planning are better prepared to meet their investment goals.

2. Try to save/invest at least 15% of your pre-tax income-

There’s a fine line that separates individuals who are retirement ready at a relatively young age and ones that aren’t. Supersavers are the ones that manage to save at least 15% of their annual income for their future, and these individuals begin saving money from the very beginning of their careers.

Saving up 15% of your income may not be easy, but it can be achieved with the help of your employer’s contribution (employer match) and cutting expenses that may not be necessary.

We also advise our readers to contribute the same amount of money your employer contributes to your retirement account.

3. Portfolio Diversification-

Successful investors always have a well-diversified portfolio consisting of various investment vehicles. Having a variety of assets in your portfolio can not only help spread across risks but can also help maximize returns.

Investors investing in stocks and mutual funds are usually advised by well-seasoned wealth managers and investors to invest across small-cap, mid-cap, and large-cap funds, which help provide a return with the right balance between risk and reward.

Portfolio diversification does not only conform to stocks and mutual funds but can also be applied to other investment instruments as well.

4. Do not give in to volatility-

Some investors immediately decide to throw in the towel during some market-influenced turbulences instead of holding on to their investments. This temporary downturn can no doubt lead to losses, but investors lose out on the growth potential over the long run.

Well-seasoned investors stake their money in an apt investment mix that fare well during the highs and the lows of the market. Even during market downturns, these investors stick to their investments and do not give in to volatility, keeping faith in the prospect of growth that lies ahead.

In case you have a lower risk appetite, consider investing in instruments with lower risk exposures. Bear in mind that the returns offered by these instruments may be significantly lower too.

5. Consider investing through platforms that charge lower fees-

One of the most important decisions an investor needs to make is the choice of brokerage. Investments through platforms like North Loop can help investors save a lot of money in commissions and other fees.

North Loop offers investors an opportunity to get invest in the US stock market, starting from just $1 in the form of fractional shares across 3000+ stocks.

North Loop also offers carefully handpicked mutual funds and Fixed Deposits offering returns up to 7%. Click here to start your investment journey with North Loop.

6. Focus on earning tax-free returns-

Making investments in instruments such as Equity Linked Savings Scheme (ELSS), Public Provident Funds, certain types of bonds, etc. can help generate tax-free returns for investors.
Although investors should not ideally plan investments revolving around factors such as tax, investments in instruments that generate high returns and reduce tax can certainly go a long way.

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Investing money may sound like a very complicated process and some investors may even incur losses in an attempt to build their wealth. However, inculcating these habits should help you achieve your financial goals and become one of the most successful investors in the world.

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This publication is provided for general information purposes only and is not intended to cover every aspect of the topics with which it deals. It is not intended be advice. You must obtain professional advice before taking, or refraining from, any action on the basis of the content in this publication. The information in this publication does not constitute legal, tax, investment or other professional advice from North Loop or its affiliates. We make no representations, warranties or guarantees, whether express or implied, that the content in the publication is accurate, complete or up to date. All opinions expressed do not reflect the views of North Loop nor are endorsed by North Loop.