In the previous post we had to chance to familiarise ourselves with the most common retailer mistakes while Investing.
In this post let us understand the perspectives of investing right from standing in the shoes of a High net worth Individual (HNI).
“Investing Mindset”, here is the mental and psychological constitution of the investor.
One needs to understand that, investing is as much a mental game as it is a game of skill and knowledge.
Even with the best of investing skills and in-depth knowledge, you are unlikely to succeed as an investor unless you have the right investing mindset.
The right investment mindset, essentially, is a combination of the following characteristics.
Over the long run, it is the right investing mindset that will make the difference between a retailer investor and a successful HNI investor.
1. Staying sane and unaffected
HNI investors are least bothered about market volatile and they are ‘okay’ with its cyclic behaviour.
Retail investor under such conditions experience tremendous pressure.
Normally, this is when most rerail investors tend to commit serious investing mistakes.
A HNI investor remail calm and composed because he/she has planned their investment. And most importantly it’s a long-term plan, so current market fluctuations matter the least.
We all know stock markets are driven by fear and greed.
Normally, retail investors tend to get greedy at the top of the market and fearful at the bottom of the market.
Successful investing is all about doing the exact opposite.
2. Chasing the proper methodology, instead of chasing returns.
If you are one such individual focused more obsessed on the results rather than the process, then you have a mindset problem with respect to investing.
Remember, investing is a lot more of getting the methodology right.
How you pick stocks, parameter considerations, leveraging the moat and determining the margin of safety, how do you add value by fine tuning your entry and exit levels; all these are part of your investment process or methodology.
A HNI investor main focus lies on perfecting this methodology and hence you see most of the renowned names are successful once.
3. Learning from the Greatest Teacher
The stock market is the best teacher known for its critical yet valuable investing lessons.
One has to be an eagle eye observer and a self-driven learner to let markets foster you with learnings.
Markets have their own way to respond, one who learns to react to the market responses in a corrective way eventually becomes a successful Investor.
Try to document the learnings from the market on a daily basis and it can become your Bible for trading.
The crux of the issue is that your mindset should be that of a self-learner.
The market is not a classroom where you will be taught the nuances.
It is a huge body of knowledge from which you can liberally draw upon.
4. Be humble and learn to forgive
If you do not practice humility in your actions, then investing is not for you.
The best of investors gets their investments wrong. The trick is to be humble enough to admit that you were wrong and take appropriate corrective action.
If arrogance leads you to either average the position or outsmarts the market, then you will have a real mindset problem when you are investing.
Accept that the market has a lot to teach you and accept your mistakes.
That is the key to the right investing mindset.
5. Action Vs planning
One can create the best of plans on the drawing board but being able to execute is more important.
There are millions of things about the stock markets that you can learn only once you start trading with real money.
Simulation can give you an edge, it will take you all together to another level!
Adopting a mindset that is purely action-oriented rather than indulging too much in paper planning and designing is what counts.
After careful observation, it has been noticed that when it comes to investing the true mindset (Retailer Vs HNI mindset) difference actually forms a subset of another major mentality.
In short, we call it the ‘I can do it myself’ mentality.
Being self-dependent is the most appreciated.
This outlook might seem to be encouraging but on the hindside, the actual scenario is otherwise.
A typical retailer might abstain from getting professional help in investing because he feels investing could be self-thought.
Investing sure is self-thought, but we don’t realise we lose precious time in understanding something complex and for something for professional aid is already available a phone call or a click away.
Most HNI investor’s journey at some point began as a retail investor but the striking difference what made them successful is they changed their outlook towards investing.
If they got stuck while backing up their finance or investing without hesitation, they sought professional aid.
There are times when in the process of learning there are series of losses made, surprisingly a retail investor is ‘okay’ making a loss of 10% but would rather take a back seat in seeking professional help where the nominal service charges are just 2%.
HNI investors, surely expert when it comes to investing but they learnt this in a smart way without burning their portfolios.
Here we are appealing for you to become a ‘Smart’ investor.
So that eventually you become an HNI Investor.