4 Habits of Successful Investors

19th century American philosopher, Ralph Waldo Emerson famously wrote "It's not the destination, it's the journey" and while this saying has ties to many parts of life it doesn't relate to investing. The destination matters.

5 min read

Sure, investors may make mistakes and will seek to learn from them but investing at its core is about reaching an objective, a goal, a destination and not what happened on our way there.

All investors will have different destinations, with some looking closer to home than others; an overseas holiday, an upgrade to the family car, or renovating the kitchen, for example.

Others may require a longer commute; buying your first home or investment property, transitioning to a comfortable retirement or creating meaningful intergenerational wealth.

We are grateful to be a trusted partner in achieving these goals with our Professionally Managed Account (PMA) investors, but what are the habits of successful investors that help them not only get started but arrive on time?

1. What is the destination?

Sitting down on your own or with your partner to discuss and list what you want to achieve with your investment portfolio is the very first step. Review these goals over time to ensure they remain relevant.

2. When are we getting there?

For each objective consider a realistic timeframe for when you wish to achieve it, updating it as time passes. For example:

Overseas Holiday – 3 Years
Deposit for a Property – 6 Years
Transitioning to Retirement – 25 Years

3. How are we getting there?

Great investment portfolios are built with a combination of growth and defensive assets. Deciding on what percentage should be applied to each usually relates back to the timeframe available and directly impacts the level of risk or potential volatility you must accept before you reach your goal.

Here are the suggested timeframes for our portfolios, click on their name to see how they have been built by our team as a guide.

Portfolio	Conservative	Balanced	Growth	High Growth
Timeframe	0-3 Years	3-5 Years	5-7 Years	7 Years

While it can be tempting to pick an investment that is more aggressive and has higher historical returns, it may not be the surest way to reach your destination; you wouldn’t take a flight to grab bread and milk at Woolies.

4. Book your tickets

Putting your plan into action is the last step and often the biggest mental hurdle to conquer.

Fear, and let’s face it, a little greed can impact your decision to get started.

Yes, there will be periods where your portfolio may go down just as there will be periods when it goes up. If you have chosen the right investment to match your timeframe and features an appropriate mix of assets, then you are well placed to arrive on time and in one piece.

Wouldn’t you accept some turbulence enroute to a beach in Hawaii or the alps in France than not going at all?

If you would like to talk to our friendly team about portfolio structures, goal setting or even our InvestSMART Portfolios please feel free to contact us at invest@investsmart.com.au

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Frequently Asked Questions about this Article…

What is the first step in setting investment goals?

The first step in setting investment goals is to sit down, either alone or with your partner, and discuss what you want to achieve with your investment portfolio. It's important to list these goals and review them over time to ensure they remain relevant.

How do I determine the timeframe for my investment goals?

To determine the timeframe for your investment goals, consider when you realistically wish to achieve each objective. For example, you might plan for an overseas holiday in 3 years, a deposit for a property in 6 years, or transitioning to retirement in 25 years.

What is the importance of balancing growth and defensive assets in a portfolio?

Balancing growth and defensive assets in a portfolio is crucial because it relates to the timeframe available and directly impacts the level of risk or potential volatility you must accept before reaching your goal. A well-balanced portfolio helps ensure you arrive at your investment destination on time.

What are the suggested timeframes for different types of investment portfolios?

The suggested timeframes for different types of investment portfolios are as follows: Conservative (0-3 years), Balanced (3-5 years), Growth (5-7 years), and High Growth (7 years or more). These timeframes help guide your investment strategy based on your goals.

Why is it important to put your investment plan into action?

Putting your investment plan into action is important because it helps you overcome mental hurdles like fear and greed. By starting your investment journey, you accept that there will be ups and downs, but with the right mix of assets and timeframe, you're well-placed to reach your goals.

How can I overcome the fear of starting my investment journey?

To overcome the fear of starting your investment journey, focus on the long-term benefits and remember that some turbulence is normal. Accepting short-term fluctuations in your portfolio can lead to achieving your long-term investment goals.

What should I do if I need help with portfolio structures or goal setting?

If you need help with portfolio structures or goal setting, you can contact the friendly team at InvestSMART by emailing invest@investsmart.com.au. They can provide guidance and support to help you achieve your investment objectives.

Why is it not advisable to choose overly aggressive investments?

Choosing overly aggressive investments may not be advisable because, while they might offer higher historical returns, they can also increase the risk of not reaching your investment destination. It's important to match your investment choice with your timeframe and risk tolerance.