We have covered the value of good financial behavior and the necessary traits that most successful investors share.  The following represents action steps successful investors take to strengthen their long-term probability of success.

Written Down Goals and Timelines:
Writing down goals and giving each an “accomplishment timeline” makes a difference.  Studies show that we are more likely to follow through on our tasks if we make a written list.  The same holds true when setting financial and life planning priorities.  Your goals are unique to you and totally achievable if written down and revisited periodically.  Your life planning goals may be even more important to you then some of your financial goals.  It’s important to reflect on these life goals which may also include future fun activities and things that bring you happiness.  Life is short and it’s important to celebrate some wins and enjoy the journey.  Having enough to live, give, save and spend on yourself and those you care about takes preparation.

Automated Investment Strategies:
Successful investors create automated investment strategies beyond retirement accounts.  Having a job description and clear timeline on the purpose of an investment account matters.  The annual limits placed on retirement contributions will not allow you to accumulate enough when you choose to re-purpose your time.  Using automation to “pay yourself first” from your checking account after each pay period sets you up for long term success.

Avoid Unnecessary Debt:
Avoiding unnecessary debt is sometimes easier said than done.  Credit cards may play a role in our spending when booking a vacation or making a big ticket purchase.  They are useful and often come with points or rewards which may be utilized for more fun.  Credit cards may also become dangerous if not monitored closely as part of your plan.  Zeroing out the balance each month is critical.  Utilizing a card may allow better visibility into your essential and discretionary spending.  This strategy may be more realistic than attempting to track every dollar you spend and getting discouraged working on a budget.    Taking a look at the last 90 days of spending may be an eye-opening experience as you seek transparency on your expenses and where the money goes.  It may also allow you to make positive changes (in real-time) to your behavior.

Not all debt is bad. For instance, having a home mortgage provides tax benefits.  Examining just how much principal is being paid each month may surprise you.  By simply paying a little extra each month, or even one full payment each year, can reduce your loan term by years of the life of the loan. Each year, as you update your balance sheet, your long-term liabilities will decrease more quickly.  As you approach your “repurpose date”, with limited to zero mortgage debt, the situation will provide you with more choices.  It will also allow you to stretch your available cash and investments further.

It’s not an easy becoming a successful investor.  As we’ve shared in this 3 part post, there are traits, attitudes, and behaviors that make a big difference.  The biggest advantage, regardless of when you start, is time.  Getting started today, even in small steps, will make a huge difference in the years to come.  Often successful investors choose an accountability partner to keep them on track.  Working with a CFP® professional who knows you, your personality, your goals, and your relationship with cash and investments can add to your likelihood of success.  Having a real, live person (not a robot) with whom you can build mutual trust with over time, is priceless.

  What does it take to become a successful investor – part 2

What does it take to become a successful investor – part 1

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