10 Characteristics of A Wise Investor

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“An investment in knowledge pays the best interest”- Benjamin Franklin

 

1. Investor should have a dream.

Remember that time that stock market hits something in you that it gets your attention and you start dreaming. You would be thinking by now of cash and riches, sweet retirement, or a capital gain that you can use in the future. It is very important since the market is volatile and we are emotional and these two go together quiet often. So you need more inspiration to keep going…

 

2. He does have clear-cut goals.

Evaluate yourself on why you are investing in the first place. The reality in the stock market is, over the years investors became traders and traders became investors. Long-term investors tend to get tempted with stock tips for quick gains without even knowing technical analysis and traders held a losing stock because they’re hoping that it will bounce back soon or NEVER.

 

3. He has already paid the Debts.

A wise investor knows how to win his battle and to have a successful victory is to lessen his enemies. Common enemies are unpaid bills, promissory notes, loans, credit cards, etc. Investing is a journey and it is first and foremost investing in yourself.

 

4.He has already kept a good Emergency Fund.

Saving is very crucial in investing. Managing personal Finance is a Must! It is always considered as a prerequisite.  It is a sound advice and many investors failed to continue because they sold their shares prematurely due to emergency and sudden and unforeseen situations. Investing without saving is some form of gambling!

 

5. He knows how to manage well his portfolio.

The right term is “diversify”. Build streams of passive and active income.  For instance, invest not only in stocks but in mutual funds, UITF, VUL, Bonds, etc…

 

6. He knows what is happening in the market.

A headline caught my attention by a popular journalist “Why Stock Market Investor does not have a clue”? Let me put this in my context; do not invest blindly and only according to your own judgment without thorough research. The Market moves in a very mysterious ways! Learn the market sentiments,trends, and basic economics .  Knowing the market well will do more good in your journey. Do your due diligence!

 

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This is a 1 year chart above. With just with one glance of this illustration, we can say that the market is going through a cycle and this is very true. History repeats itself and people tends to behave fairly the same manner in terms of money. With knowing this, you would be more confident and at the same time careful to make a decision on what to do next…

 

7. A wise investor knows how to read a chart.

Study price action and when is the right time to buy. It can only be answered through technical analysis. Knowing basic chart analysis, support and resistance, and applying technical indicators will give you more confirmations if you are doing the right thing or not.

 

8. He knows when to divorce his stock.

Companies are vulnerable to changes and failures. They’re not super entities. If something is wrong with your stocks and it is going a different way, do your best judgment before it’s too late. A blue chip stocks can’t be a guarantee to stay on the index forever. It can go down and be replaced by a second-liner growing stocks.

 

 9. He knows when to hold and let go.

A great mantra of the market; “If it can’t go down, it will continue to go up”.  Trend is your best friend. Learn when to save your bullet and pull the trigger. Market is volatile so there will be times that you need to take profit. Nevertheless, the best thing to prepare is to  find the best time to position yourself for the next bull run!

 

10. He knows how to share and give back.

Being in the market is not all about the money. We can’t be arrogant and selfish in the finance world. Bill Gates and Warren Buffet even gave away their wealth to the people in need and only leaving little for their kids.

 

 

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