Building wealth is a gradual process. Many people consider investing as one of the ways to build wealth. Having a steady source of income can also help you prepare for your financial dreams. However, it is imperative to understand the basics of becoming an investor. Being consistent in these basics can form the fulcrum for building an investment portfolio to meet your goals. Investing can be complex. Many successful investors have advised on different practices that can help in the journey to becoming the next ‘Warren Buffet’.
This article is solely aimed at informing on the habits to consider when investing.
Below are some of the habits to consider in your journey to becoming better at investing:
Automate for investments quota
With the release of various financial apps, auto-saving for investment has become a lot easier. These apps could help you deduct part of your earnings into investment. Automating your savings for investment helps you ‘save first and spend what remains.’ Although, it is not advisable to live in debt while investing. It is essential to make your calculations before setting the recurring auto-saving. Some apps even help you in calculating the amount you can afford to invest periodically.
Prepare for emergencies
While it is good to automate your savings, it is also important to consider an emergency fund. Ensure you factor in expenses that arise as a result of emergencies. For instance, your car has unexpectedly broken down during the month, you can take out of your emergency fund to solve the problem. A rule of thumb is to set aside six months’ worth of expenses for an emergency.
Now that you have auto-save for investing and set aside an emergency fund, consider diversifying your portfolio with a goal in mind. You have likely heard the phrase do not put all their eggs in one basket. For more context, diversification is a risk management strategy that involves blending different investments in a single portfolio. Remember, diversification does not ensure a profit or guarantee against loss.
Stick to your plan
The stock market will always have highs and lows. During these times, it is advisable to stick to your plan. One of the first steps in investing is having a goal. Sticking to your plan will help you withstand the changes that occur in the market. It is also noteworthy to be flexible and know when to buy or sell. Your financial plan could be your springboard in your quest to build wealth.
Monitor Your Investments
Monitoring your investment can help you make more informed decisions. The Passfolio app enables users to monitor their investments. Through our consolidated dashboard, you can see how your investments are faring. Don’t have Passfolio yet? Sign up now! To start trading. Passfolio Securities offers over 5,800 ETFs, REITs, and stocks. Access over 44 cryptocurrencies through Passfolio Financial. Enjoy these and many more features all on one app.