The 6 Investing Habits you Need to Break

Your mindset holds more sway than the market movements themselves. It’s time to break up with bad investing habits

Maria Collinge
January 24, 2023
Your journey towards financial freedom starts with you taking meaningful action Photo: Vanessa Murrieta/Unsplash)
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Whether you’re a seasoned investor or new to the business of making money with your own money, the bottom line is we’re all human. And in the investing world, we’re prone to making bad and detrimental decisions when the emotional side of our brain infiltrates our decision-making. But impulsive decisions and short-term thinking are detrimental to long-term growth. 

1. Trying to get rich overnight

The biggest mistake many investors make is holding onto the assumption that they’ll get rich quick. The reality is, investing is a long game and it’s unlikely that you’ll invest in the next bubblegum machine that will make you rich within the next week, the next month, even the next year. In fact, a successful investor adopts a big picture, long-term mindset. 

Yes, there are some people out there who have a deep knowledge of stocks and shares, who can make a lucrative career out of dipping in and out of the stock market over the course of a few hours. But that requires time to calculate when to buy and sell, and that requires deep knowledge, experience and expertise. And if it doesn’t pan out as you hoped, well then it will be burning a whole in your pocket too. Investing expert Warren Buffet says: “If you aren’t thinking about owning a stock for ten years, don’t even think about owning it for ten minutes”. Listen to the expert. 

Successful investors are those that stay in for the long haul (Photo: Katt Yukawa/Unspash)

2. Giving your money to someone else to invest

The next bad habit is that many investors fall into the trap in, is handing over their money to someone else to invest. The financial services industry has one raison d’etre – making a profit. And whilst they might be able to offer services that can assist you in your investing journey, the hard truth is thus: no one cares about your financial future as much as you do. Nobody. So whilst pumping your money into an actively managed fund, for example, might help you eliminate the stress of having to read up around investing and making informed decisions for yourself, the downside is that you have someone else in the driving seat of your investment decisions – those investment decisions could be detrimental to your personal financial goals. 

So if you want to optimise your returns, consider taking full responsibility of your own investments. To some, this might seem a daunting and overwhelming task, but trust us when we say it really doesn’t need to be that way. Be willing to do your own research, so that you can make your own decisions about whether the companies you are about to invest in has the same values as you. And the silver lining? You feel like a money boss along the way. How empowering is that?! It will take time to do this on your own. But the time you invest in doing this today is far better spent in the long run.

3. Investing in something you don't understand

The third bad habit to break up with is investing in something you don’t understand just because it is very hyped in the media. It’s okay to get inspiration about new investment opportunities from others, but avoid acting on hype, hearsay or news.Think of it like this: every time you hear a piece of good advice everyone else has got that exact same advice too. And when you are done thinking about whether to buy or not, the hype is already reflected in the price of the investment, and you actually risk doing a bad trade.

"No one cares about your financial future as much as you do."

Always do your own research and keep your critical hat on. That way, you will avoid buying something that didn’t live up to the expectations but also avoid panic selling, when others are acting nervous around you.

4. Checking your investments 24/7

If you want to be a successful investor, checking your investments around the clock is not the way to go. We live in a mobile app obsessive culture, where scrolling through a ton of apps has become second nature. But this is a dangerous habit when it comes to your investments, because you’ll be exposed to the volatility of your investments on a daily basis, which could bring your emotions to the forefront and compel you to panic sell your assets at a loss. Instead, you need to be looking at its performance over the long term and only checking in with your investments quarterly. Focus on your strategy and stay in your lane.

5. Not having a plan

The ultimate mistake that people make when embarking on their investment journey, is not having a plan. Going into investment blind with no plan could lead to significant losses in capital, which is why it’s crucial you know why you’re investing, what you want to invest in, how much money you have, and what types of assets you want to weave into your portfolio. But take it this way: with no concrete plan, you’ll trip up when the markets take a tumble and risk panic selling your assets for a loss. We don’t want that for your investments and we’re sure you don’t too. 

6. Not diversifying your portfolio

Not diversifying your investment portfolio can expose you to some serious risks. One of the biggest risks is that if a particular investment or industry performs poorly, your entire portfolio can suffer. This can lead to significant losses and make it harder for you to reach your financial goals. That’s why it's important to diversify your investments and spread your holdings across different assets, industries. 

Not diversifying your investment portfolio could cost you a fortune (Photo: Emy/Unsplash)

Breaking up with bad investment habits starts today

Bad investment habits can be detrimental to your financial success. Some common bad habits include investing without a plan, chasing after short-term gains, and not diversifying your portfolio. These habits can lead to impulsive decision-making, lack of discipline, and ultimately, financial losses. By avoiding these bad habits, you can improve your chances of success as an investor and reach your financial goals. It's important to have a well-thought-out plan, be patient and disciplined, and diversify your investments to mitigate risk.