Throughout their careers, successful investors acquire a variety of essential talents. You are not born knowing how to study a stock or take advantage of investing possibilities using critical thinking; such abilities must be learnt and developed through time. Patience is an essential and often misused financial skill many individuals should practice.
When you are young, you are primarily concerned with rapid satisfaction, and any parent who has dealt with a child’s temper tantrum can agree with this statement. But patience can be cultivated when investing, and it will certainly get you closer to achieving your financial goals.
Patience frequently entails remaining calm in situations over which you have little control. Even if you are patient in certain aspects of your life, you must practice and learn to be disciplined in all of them.
If you feel like you could sometimes make better investing decisions and not rush into buying or selling without using common sense, keep reading and see if these practical tips can help you learn the art of patience.
Use time to your advantage
Sometimes, putting off investing until you think you’ll have more money doesn’t make much sense. After all, spending tends to rise with income. If you develop the practice of putting aside a percentage of your income early on, you will benefit from the power of compounding.
Imagine two scenarios – they both presume you invest £100 each month for a 4% annual return. In the first scenario, you invest £500 per year for ten years for a total of £5000, then stop. In the second case, you wait ten years before contributing, then come back and keep investing every month for the following years and say you reach a total investment higher than £5000 – say, £7000.
Yet, the first scenario can prove more fruitful, as the time that has passed by hasn’t stopped money from coming to you.
Still, if you have goals like paying for your children’s tuition, you shouldn’t let the compounding lesson prevent you from investing in your infant’s education. Sometimes, the more you save today, the more rewards you will receive later.
Diversify accordingly
If you’ve been fond of investments, you’re most likely tired of hearing that stocks and bonds frequently balance each other out. While this is true, there have been times when the two markets moved in lockstep.
Luckily, nowadays, you have a much broader range of investment options to choose from, including the following:
• Short-term corporate bond funds
• Short-term certificates of deposit
• High-yield saving accounts
• Dividend stock funds
• Non-fungible tokens
• Cryptocurrency.
Cryptocurrency isn’t as new as it was anymore, and the internet abounds with tips and tricks to help you introduce Bitcoin, Ethereum, etc., into your portfolio. To buy such currencies is easy:
• Choose a reliable and trustworthy exchange.
• Make an account
• Link a card
• Choose a digital currency
• Decide on the amount you want to buy.
Be cautious of the trading platform you choose, though – the more popular the app is, the safer your money will be on it. Several are available, but if you’re a newbie, you should register for one that balances user-friendliness with high security.
Also, you’ll most likely want to buy Bitcoin (BTC) because it’s the most popular cryptocurrency. Remember that you shouldn’t jump into spending your money without checking the Bitcoin price and chart first. It’s also safe to check other digital coins, too, because there’s more to crypto than Bitcoin and Ethereum.
Put yourself first
It’s not easy to put off short-term satisfaction for long-term aspirations. However, learning to say no to something that brings you little joy now to accomplish something more significant in the future can be the key to success. It’s easy to spend big money on material stuff just to realise the budget for the vacation in Bali is gone. And it’s just as simple to spend hundreds on clothes and perfumes instead of putting that money aside for saving and investments that will help you financially years into the future.
If you’re not disciplined enough to set aside a percentage of your monthly income for investments and savings, you won’t be able to reap the benefits of the second and third principles of smart investing.
Invest regularly
The benefit of putting money down every month is that you reap the benefits of dollar-cost averaging. When you invest a fixed amount at regular intervals, you end up purchasing shares of investment during bull and bear markets. Therefore, your monthly investment buys fewer shares when prices are up compared to when they’re low.
While collar cost averaging doesn’t guarantee profits, it can help you be more disciplined and avoid poor financial decisions. As those investments finally recover – and the long-term history of financial markets shows they will – you’ll see sticking to the assets wasn’t a horrible decision.
One word of caution: before beginning a regular investing strategy, you should assess your capacity to stick with the investments through all sorts of markets.
Determine your risk tolerance
You have to be completely honest with how much risk you can take when determining which investments to pursue. If you’re not comfortable with, say, an asset that decreases by 30% or more in value, then maybe you shouldn’t expose to such aggressive stocks. And even if you don’t mind taking risks in order to gain big profits, you might want to think twice about what you put your money in and not invest too much in highly volatile assets.
Your overall portfolio should benefit from a mix of assets, including safe ones that can prevent you from losing all your money.
Conclusion
If you underestimated patience before reading this post, you’ve probably realised its importance now. To be educated, you must let go of momentous pleasures and keep greater aspirations in mind. Yes, it’s beautiful to be spontaneous and live in the moment, but sometimes, discipline is required, and without it, it’s hard to realise extraordinary things.
Here are some tips disciplined investors would share with you:
• Don’t let emotions take control of your actions
• Understand that the market has a cyclical nature
• Balance your portfolio
• Don’t touch your portfolio.
