Traits Of A Good Investor

The pandemic has changed the world forever. The social distancing has become the new normal. The GDP of world economies suffered a severe blow. The markets witnessed worst fall in percentage terms. Naturally, investors have become anxious.

However, the markets have recovered smartly and touched new highs. Usually people buy low and sell high, but in the fall last year many investors could not buy when stocks were low. If everyone is told to"buy low, and sell high" why do people sell when they hear the smallest of bad news about a company? When stocks are available at fire-sale prices, everybody wants to sell. Investors often make a beeline to sell instead of buying undervalued stocks.

Whenever volatility hits the markets investors panic. This is short term strategy. every single study done on the subject found that buying and holding will beat trading long-term for the common retail investor. 

During 1992-93, BSE Sensex fell by 53%. India's GDP in 1992 was mere 28,820.84 crores. Today BSE Sensex has fallen by a mere 25% and India's GDP has touched 3 trillion USD. The point is the world is come out stronger from the present crisis, and growth will be on track after a few quarters. Historically, massive rallies have followed a huge crisis.

There will be sharp falls every few years. As an investor, you should use this to add more to investments. For example, in 2008 the worst recession hit the world that destroyed the wealth of investors, but a decade later markets are at twice the level then they were in 2008. Every crisis should be considered as a brief pause in one's long-term investing strategy.

If you are not an expert, you should avoid making decisions that can cause more harm then good. In a falling market, it is best to avoid checking the portfolio. It will only lead to more stress and anxiety which is something an investor should avoid at all costs. The best path of action is to let the dust settle and wait for the market to return to normal.

However, if one is reluctant to invest in equities, one must invest in fixed income plans of mutual funds. The debt funds are ideal to build a regular income-generating portfolio. As an investor, one must consistently strive to build a portfolio that ensures decent risk-adjusted returns over a period of time.

Finally, it is best have a good financial advisor by your side. Not only they help you to stay motivated but also help you to avoid making wrong decisions.