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FINANCE: Five Traits Of a Disciplined Investor


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Starting an investment portfolio, be it big or small, requires some form of commitment from the prospective investor. Most importantly, the investor needs to have a goal in mind before starting to invest.

Aneesa Razack, CEO of FNB Share Investing, says “It’s quite common that people start investing without having established the reason or aim for starting an investment. Having a clear investment strategy helps in setting goals and timelines. It also helps you to understand your risk appetite and most importantly, the amount that you can afford to put away.”

“The market is replete with different types of investment products; however, choosing a suitable product may be daunting for the novice investor. In this instance it becomes all the more important to seek expert advice from a qualified professional,” she adds.

Here are some key personality trains of a disciplined investor:

It’s important to understand that investing is not about quick returns, therefore patience plays a big role. Simply because the market is down at a particular time does not mean that things will not change. It’s important not to act on a whim and decide to sell. For example, investing in stock shares comes with a degree of risk and it’s the nature of shares to fluctuate from time to time. Therefore reacting to short-term market jitters could negatively impact your investment.

Focused and goal oriented
When investing, have a goal in mind and know what you want to achieve over a set period of time. Having a goal deters one from making impulsive decisions such as deciding to sell to use the money for something else. It’s important to stay focused on the end goal, if the aim is to stay invested for five years then it’s best to remain committed and stay invested for the long-term.

Never make the mistake of responding to hearsay about the market, people have different opinions about which direction the market will take. Discipline means sticking to your strategy or only changing it based on informed opinion and not on rumour. It’s important to use reliable sources of information and not rely on ill-informed friends and family.

Deciding to invest means there’s an amount of money that has to be directed towards the investment on a monthly basis. For Example, FNB’s Top 40 Exchange Traded Fund (ETF) is a threshold for anyone to enter the stock market, at only R300 a month the investor is given access to invest in the 40 biggest companies listed in the JSE. It’s important to ensure that a sum of money is allocated on a monthly basis towards the investment.

There are times when the market will plunge and lead to some losses. It’s at such times that the investor’s resilience gets tested and those who panic might react. It’s important to remember that the market goes up and down frequently. In the long run, there’s a better chance of making gains when one is in it for the long haul.

“Investing contains both risk and reward. While there are various factors that could determine the rewards, the attitude of the investor also plays a big role in their ability to evaluate the associated risk they are willing to take,” concludes Razack.

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