How to Develop the Habit of Investing

Ever wondered why some people are successful in investing while some struggle in their investment journey. 

You have all the information on the internet about different ways to invest. So where do you fall behind?

The answer lies in your habits. Investment habits!

In the digital world everyone knows the importance of investing. Being aware of how crucial investing is, we somehow do not develop the habit of investing.

The lack of investing habits is a major roadblock to the path of financial independence. We often read about habits of successful investors but aren’t able to figure out the ways to inculcate the investing habits in us.

It’s time to learn how to develop habit of investing and move ahead on the journey of sound financial future!!

Start Early. Start Today

The habits developed in early life stay with you for a lifetime. It’s important to start young. Starting early always gives you a head start, be it in life or investing. 

The power of compounding works when you give your investment time to breathe & grow. Developing a habit of saving & investing will take you miles ahead of others. Controlling the urge to spend that extra $ on something you don’t need and to saving it will be the stepping stone in your journey.

The ace investor Mr. Warren buffet started investing at the age of 14 & yet he thought he was a bit late to begin. Well, it’s difficult to be a Warren Buffet and replicate the kind of returns he has generated but you can get inspired by the results he has generated and learn from them.

But wait! I am in my mid 20’s or 30’s or 40’s. Am I late?

The best time to start was yesterday. The next best time is NOW. It is the first day of the rest of your life, make it count.

Don’t be stressed about the past. Now is the time to develop a new habit, to start with something new. For you and your future!!

Start small

Whenever you start with something new, go low and slow. Your resources, efforts & time will increase gradually.

Begin with investing a small amount that you can easily set aside from the money you have. Don’t go all in from the beginning. Investing a small amount will not be hard on your pocket and will not make you feel the urge to withdraw it anytime soon.

Starting small gives you the flexibility to learn more about the investment and explore other options.

We humans, tend to ignore small things in life & just want to see something big happening. But we forget that small little things combine to become a great big picture. Similarly when you begin with something small you won’t think much about it but when it starts giving you results in form of a return you will realize the importance of these small little steps.

Think of saving before spending

It’s sale time, 30-50% discount on your favorite brands!! Want to go shopping? Forget about savings, our monthly budget goes for a toss.

Have you ever realized how many times we just shop for the sake of shopping? You buy things that you actually don’t need. 

You spend $ on things you don’t need & at the time of crisis you crave those $ for things you need.

Ask me personally and to me, this is the #1 habit of successful investors I would want you to inculcate first. Think of saving first.

The recent tough times of covid-19 have made us realize how important it is for everyone to live within their means so that when difficult times knock on your door you have enough cushion to survive such draining times.

You should have a clear demarcation regarding your needs and wants. If you can clearly identify them you are good to go on the path of achieving financial freedom.

Begin with Low risk instruments

Think of the time you started to learn to drive a car. Did the instructor hand over you a sports car straightaway to have a spin ?

No. Right!

Likewise being a beginner, investing directly without any knowledge & guidance could cost you heavily not in terms of money but also in terms of morale.

Likewise being a beginner investing directly without any knowledge & guidance could cost you heavily not in terms of money but also in terms of morale.

Starting your investment journey through a Certificate of deposits or bonds or a mutual fund could give a steady push to your investment journey. These instruments are regulated & run by experienced professionals.

It’s like you first learn how to swim and then explore more adventurous options rather than diving directly into an ocean.

The financial market is like an ocean where you have a lot to learn.

Investing through these will give you psychological comfort and time so that you can learn more with time.

Invest with a goal

Goals are what we wish to achieve; specific and measurable objectives. Goals provide you with long-term vision and short-term motivation.

Investing without a goal would be like running without any direction. You will not feel your efforts are worth it.

But what could your goals be? Probably going for a vacation or buying a new car or financial independence or something which even I can’t think of right now.

Setting a goal is a very personal thing. It depends on the individual. But let me tell you investing without a goal is one of the most common mistake people make. And lack of this habit affects their financial stability.

But how come it is a mistake, I am still investing. Right!!

Surely you are but without a purpose.

And when you do that our human psychology tends to remind us that hey you got some dollars parked in that investment. It has given some return as well. Let’s put them to use for something. And that something my friend is not your prescribed goal. In fact, you don’t have any.

And that’s how your cycle of saving & investment breaks. 

You end up liquidating your invested amount and further fail to reinvest the same. The time horizon required for the power of compounding to kick in breaks.

Patience is the Key

Patience is the key that connects efforts to success. Everything takes its own sweet time and everything will come to you at the right moment.

No one can become a millionaire overnight. The renowned investor Mr. Warren Buffet too required time so that he could enjoy the multi-bagger returns from his investments.

Patience is not just an important aspect of investing but life too. The more time you give to investment, there are likely high the chances of giving more return.

The power of compounding is the eighth wonder of the world.

It also works on the principle of time. To see the magic you need to give more time to your investment. The statement holds true not just in finance but in life and relations too. Everything cannot be an instant coffee.

Overnight success is the result of many nights of perseverance that the world cannot see.

Invest in yourself

Well you are investing hard earned dollars in financial instruments. But what you should invest in yourself?

Your time and energy.

To learn and grow!

But you already do that. Right?

Well probably not !

There are few things in life which should be learned to acquire a skill for life. It might not be that relevant for your job(at times it might be) but it is pertinent for life. Learning about personal finance and investing is one of them. You might be a coder or a doctor or chef or anyone, but everyone needs to learn to art of saving and spending.

Read about your investment. Learn about new things you can invest in. To take care of your financial independence you don’t need to be a finance pro. Anybody can do it. All you need to do is keep learning and be aware.

Give yourself and your investment time so both can grow. Read books or listen to podcast. As you learn you can switch your investment to direct equity which is slightly more risky but more rewarding investment tool.

And develop a skill just for yourself, which makes you happy. And follow not for money but for passion.

Trust me you will find yourself in a different zone (happy and lively).

Steering thoughts to the shore

Discipline and perseverance are important in life to achieve any goal. It may relate to anything in life. Finance is no different. You need to adopt the right habits which will help you to achieve the path of financial freedom.

Money may not be everything but it is important in many ways. To live a life without any financial liability, to follow your heart or to live life your way you need to set things right early.

Learn, grow and keep following your zestful dreams !!