The perfect investor is somebody who plans for the future, is patient and deliberate in carrying out his plans. He plans, has patience and is persistent.
This comes down to two things: his attitudes and his habits.
Trust: The perfect investor trusts. He does not trust too easily, or the wrong idea or the wrong person. But he knows that unless he trusts, he cannot build a good future. He knows that when he invests, he takes a leap of faith. He has faith in University Street and takes the right fork on the road of investing. He has faith in the future despite the problems of today and understands that his future will be better if he does the right things than if he doesn’t.
Resilience: The perfect investor is resilient. He knows there will be setbacks and adversities. He plans for them but knows that despite all planning, he will have to face them sometime. But they are willing and able to bounce back even from the serious adversities. This is because he has a plan and follows it.
Perspective: The perfect investor maintains his perspective in both bull and bear markets. They know the difference between little things and big things, the short-term and the long-term. They get it by reading, from their trusted friends and trust worthy financial advisors.
Patience: The perfect investor is patient. He knows that Rome was not built in a day. It takes time for a seed to grow into a tree. He follows a sound plan for investing money that he will not need in decades and does not get swayed by short-term gyrations of Mr. Market.
Common sense: The perfect investor has common sense. This means the following:
- If an investment offers very attractive returns without any risk, you can be certain you are missing something.
- If an investment is really as wonderful as it is made out to be, why hasn’t it be snapped by all the full-time money managers? If the professionals do not want it, why should you want it?
- Is the investment help by respected pension funds and if not why should your personal pension fund hold it?
- Saving is important. You can spend a dollar only once. This is pure common sense but many people do not figure it out.
The perfect investor has good habits of investing, especially the following six habits:
- Successful investors are not aimless and goalless. They know where they are going and set clearly articulated and measurable goals for getting there.
- Successful investors make plans to meet their goals and then follow their plans.
- Successful investors save regularly, automatically and routinely. After all you cannot invest money if you don’t have it and unless you save you cannot have it.
- Successful investors make a practice of delaying gratification and living below their means. They can live on less and still be happy. They have managed to cut the emotional cord between how much money they have and how happy they are.
- Successful investors have emotions, but they don’t let greed or fear get the better of them. They have a plan, they follow it and rebalance and ultimately are successful.
- Successful investors expect setbacks and stay in the game anyway. They follow the plan. They are resilient.
All of this is simple, but not easy. But have them as your guideposts and even if you fall a little, you can get up with the help of these guideposts and become as perfect an investor as you can be.