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GARDEN ROUTE NEWS - Over many years of advising clients in creating and maintaining wealth we have identified what we believe to be eight behavioural skills common to investors who achieve their investment goals.
These skills cover how they behave in the creation and preservation of capital and should be easily applied by all investors as they go about creating and maintaining wealth.
Successful investors have the following behavioural skills.
They have a plan
It appears to be overly simple, but as we all know failing to plan is planning to fail. Successful investors engage with a planner to develop a personal financial plan that will set out an appropriate asset allocation to achieve their goals. These goals are unique to each person but will include providing for retirement, saving for a goal, or creating an income during retirement.
Clients who have a plan will therefore be diversified across various asset classes and their investments will be rebalanced periodically.
By sticking to a plan, the investors achieve their long- and short-term goals. They also generally achieve greater success in achieving their goals by having a clearly defined investment strategy.
They have emotional discipline
Having emotional discipline is one of the hardest behaviours to learn and is key to achieving successful investment outcomes. The last year has shown us that successful investors don’t give in to impulsive decision making driven by fear and doubt during difficult times or greed in good times.
Emotional discipline allows you to stick to your plan and ensures that investors can capture gains in their investment portfolios over all the investment cycles through their diversified asset classes.
Control over your emotions ensures that you don’t sell out of portfolios when markets are down, or chase returns during bull markets.
They are informed
Successful investors understand their financial plans and understand how local and global events impact on their portfolios. This means that they seldom make expensive financial mistakes through ignorance.
By being informed they understand investment risk but also understand other risks in their lives. This means that they have appropriate emergency funds, business exit strategies, health and life insurance and a proper estate plan which includes an up to date will.
Information is power!
They don't follow the herd
By not following the herd successful investors understand that it is not about timing the market and the latest ‘hot’ investment but rather about building wealth and investing for the long term.
This allows successful investors to stay focused on long-term goals and not get distracted by short-term market noise or volatility.
They act without inertia
Successful investors are proactive and don’t procrastinate. This means that they do not delay in implementing their plans by starting to save early and ensuring that they have the appropriate risk cover in place.
Through not procrastinating they also do not incur unnecessary costs such as interest in unpaid credit card accounts or late submission of their tax returns.
Being proactive allows their affairs to be well organised which means they are then more likely to achieve their long-term goals.
They are frugal
It is simple but, just as common sense is not common, successful investors live within their means. This means that successful investors are careful in how they allocate their resources – they avoid extravagant or wasteful expenditure.
The world’s most famous investor, Warren Buffet, still lives in the home he bought in 1958 and drives a 2014 Cadillac. Clearly, he understands a frugal lifestyle and living within his means – if it works for him it can work for all successful investors.
We are available to help you become a successful investor and guide you in a journey of investment success as you learn or develop the skills of a successful investor.
Our office details in the Garden Route:
PSG Mossel Bay Diaz
Sioux Building
16 Sioux Street
Mossel Bay
Website Mossel Bay
Facebook Mossel Bay
PSG George Central
Dynarc House, 2nd Floor
31 Courtenay Street
George
Website George
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PSG Knysna
Unit 1, Heads View
Old Toll Road
Knysna
Knysna Website
PSG Plettenberg Bay
7 Gibb Street
Plettenberg Bay
Plettenberg Bay Website
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The information in this document is provided as general information. It does not constitute financial, tax, legal or investment advice and the PSG Konsult Group of Companies does not guarantee its suitability or potential value.
Since individual needs and risk profiles differ, we suggest you consult your qualified financial adviser, if needed. PSG Wealth Financial Planning (Pty) Ltd is an authorised financial services provider. FSP 728.
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