Good intentions can help when you begin investing, but to continue doing so for a prolonged period, you must get rid of certain bad habits. For example, treasuring impractical goals, with no timeline whatsoever. Investors are required to analyse both their current and intended financial positions before moving onto accomplishing any objective.
Others are as follows:
- Resisting Change
Change is perhaps the only constant thing in this whole world, and resisting or running away from it is preposterous. Yes, retaining the status quo seems comfortable, but it can do no good to your monetary conditions. To achieve what you wish to achieve, embrace the trends emerging now and then.
- No Plan
According to the experts offering programs for financial wellness in South Africa, without a definite plan, you will get distracted. The investors, who do not decide how to manage the money beforehand, end up spending too much or buying things on an impulse.
You must formulate a budget that comprises all of your earnings, expenditures, and savings. In case you do something that is not a part of your budget, please evaluate how to address the gap the next month.
- Under Diversifying
A large number of investors think about all the risks that their portfolio may inflict. For example, all the bias associated with the home country compels you to believe that the domestic market is safer than the international one and can provide more profits. Portfolio diversification may seem risky but worth indulging in.
- Chasing Performance
Anticipating how you will perform in the future by taking the past performances into account is considered one of the biggest behavioral prejudices. Performance chasers often lose cash inflows, which make assets in the markets more expensive or cheaper than they already are.
- Zero Discipline
Without discipline, the investors will, unfortunately,not be able to accomplish any of the financial goals. Instead of experimenting with strategies, they must give the one they have chosen enough time to generate results. If you are disciplined consistently, your efforts will come to fruition soon. Now isn’t that you want?
- Looking for Comfort
Looking for comfort leads even the most successful investors to overpay for the items that offer downside protection like the variable annuities. Overpaying causes poor returns. Yes, it is fine to do so for insurance, but not for the lottery. Understanding the difference between what is useful and what is not is what matters here.
If you want comfort in terms of smooth returns, you may agree to overpay for private equities. The fact that the returns are not reported frequently and that the valuations are not adjusted as per the actual market value proves there is no such thing as a smooth return. The sooner you understand this, the better.
Finally, yet importantly, the investors must never procrastinate when preparing or acting upon a financial plan. Yes, at times, you may feel like postponing things, but try to reject that feeling immediately. By avoiding procrastination, you will come closer to your ultimate objective.
In order to attain investment success, you must replace the aforementioned bad habits with good approaches and practices as soon as possible. Doing so will obviously not be easy, but, remember, it can lead to phenomenal improvements in terms of returns. Seek third party assistance if necessary.