Achieving investment success is no mean feat. If you are working towards long-term goals, there are certain behaviours and mindsets that, when put into practice consistently, could help you to earn the returns you need.
People often avoid the stock market entirely because of one bad experience. But by learning from successful investors throughout history, you could benefit from the opportunities it presents.
Global events such as war, an approaching election cycle, and economic turbulence have once again created uncertainty in the stock markets. Even though uncertainty isn’t unusual, it often leads unsuspecting investors to make common mistakes.
So, how can you make sure you keep a sensible investing head when all about you are losing theirs? Read on to discover some of the common mistakes to avoid and the more sensible steps to take that could lead you to success.
The behaviours required for investing success don’t always come naturally
Sadly, many investors will be unsuccessful in their attempts to generate wealth on the stock market.
- Chase winning funds
- Buy high and sell low
- React rather than stick to a plan.
In fact, as the Financial Times reports, poor timing in buying and selling shares means that the average investor generates lower returns on their wealth than the fund they are invested in.
Research into behavioural finance – the psychology of why humans behave the way they do with money – has helped to shed light on the reasons for these mistakes. Simply put, humans are not wired for long-term thinking.
Over the centuries, we’ve ensured our survival by reacting to dangerous situations in the here and now, but this instinct doesn’t translate well to investing. Uncertainty, and the stress that it can cause, heightens our emotions and increases the difficulty of making sensible decisions that align with long-term success.
Fortunately, with a little bit of understanding and self-awareness, you can overcome this challenge. Hopefully in the future, it will become easier to override the temptation to cut and run when markets become volatile.
Learning from history can help you to develop a mindset for investment success
Even though our wiring may not be the best guide for investing, it’s possible to see a model of the behaviours required for success in those who have gone before us. A look back throughout history reveals three mindsets that could help you to navigate stock market uncertainty.
1. Take a long-term perspective
By keeping in mind the long-term goal you are working towards – whether that’s a dream holiday, retirement, or anything else – you can provide yourself with something positive to focus on when approaching these challenges.
This can make it a little easier to tune out the noise of the headlines that can influence those panicked moves that you may later come to regret.
2. Accept short-term disappointment
As with everything in life, it’s inevitable that you will encounter challenges and setbacks when investing, perhaps most notably in the form of volatility. By embracing these challenges as part of the journey, you take away their power to derail your plan.
3. Be patient
If you can avoid interfering with your investments, you could have a greater opportunity to generate positive returns than by attempting to time the market.
Here at Ascenta Wealth, these are the mindsets and behaviours that we help all our clients to master. While it’s impossible to guarantee any particular result, if you can follow this roadmap that the great investors in history have created for us, you can feel confident that you’re doing everything possible to achieve your goals.
Get in touch
If you’d like to learn more about how we can help you achieve your long-term financial goals using the key principles of successful investing, please get in touch.