HabitsSuccess Blog

How To Build Good Investing Habits

Chris Allen

4 min read

It is often said that in life the more you put in the more you get out and this has never been more plainly clear than in the world of investments. Remember that every dime you invest will grow and accrue interest.

This particular piece of advice though has two meanings. Firstly, it means don’t invest more than you can afford to. Afterall, the future is very important, but in order to get there we all need to eat today. Investing modestly is especially important when it comes to risky investments like stocks and cryptocurrencies.

But at the same time, do be ready to invest as much as you can possibly spare. If you earn $2,000 per month and your outgoings are $1500 per month, then you have up to $500 available to invest. Remember, you don’t have to invest in risky strategies, ETFs are low risk and ISA’s are safe, and allow you to access the money if you ever need it.

2. Invest Long Term

The world’s most famous and successful investor Warren Buffet once said “Someone’s sitting in the shade today because someone planted a tree a long time ago”. Investing is not a get rich quick scheme, it is rather a long game of accrual and it may well take years before you really start to reap the benefits. ETFs and ISA’s are both examples of steady but slow investments and it can even take a decade of compound interest and reinvestment before they really start to pay.

And speaking of decades, Mr Buffet also said “If you aren’t thinking about owning a stock for ten years, don’t even think about owning it for ten minutes”. Whilst many investors have images of flipping stocks, of buying low and selling high, the reality is often a lot less exciting; shrewd investors prefer to look for shares in quality companies and let the dividends roll in year after year.

3. Go For Low Fee Investments

One of the recurring barriers preventing aspiring investors from even getting started is the fees. Many investment platforms carry transaction fees which can be extremely off-putting to beginner investors who are only looking to put small amounts in. For example, buying company shares and stock can prove to be especially costly as stock exchanges only deal with licensed brokers, and these brokers charge their clients intermediary or brokerage fees.

Indeed, many online stock brokers charge $5 per trade and while this may not bother an investor looking to put $1000 in, it will rankle those who are only able to invest $50.

Therefore finding low fee investments is a great hack for anybody looking to get started in investing. Examples of low fee investments include index funds and ISAs. Many online brokers also now offer low or zero fee EFT trades.

That said, another crucial investment habit is to diversify one’s portfolio and therefore nobody should ever rely exclusively on index funds, ISA’s and ETS. Any healthy portfolio should include some stocks and the best way to invest in stocks is to use low fee, budget online broker platforms wherever possible.

Final Thoughts On Building The Best Investing Habits

Ultimately, every investor is different and all have their own investment budget, investment goals, risk appetite and level of sophistication. Really, the best investment habits are building a strategy that works for you and sticking to it, which nicely brings us to yet  another quote from Warren Buffet;

“Anything you invest in yourself, you get back tenfold, (and) nobody can tax it away; they can’t steal it from you.”

Anyway, we hope you found this guide helpful and that you are now ready to take your investing to the next level.