Question

Can you prepare a summary to apply The 7 Habits of Highly Effective investors as part of apply the Investment Management course?

in order to have healthy financial person and success in your life as a investor that benefits and sustains in investing life.

Answer 1

7 Habits of Highly Effective Investors

• Ascertain goals and risk appetite. For instance, what is the target networth one is having after 5 years, 10years, post retirement etc.
• Diversification - Investments in various financial assets depending on the risk appetite - for instance, having a healthy mix of debt, equity and commodities. Also, further diversification within these asset classes can help mitigate risk
• Being abreast with latest updates - Regularly reading business newspapers, magazines and online content; also watching reputed news channels focussing on economics & share markets. Taking views from different sources would be further helpful in having a well-rounded view on markets
• Staying committed to long-term investments and not getting distracted by short-term movements in the market
• Understanding the business of a company (relevant for corporate debt and equity investments) by going through its financials, presentations, research notes etc. Participating in the shareholder's meet and asking relevant questions to the management of the company
• Understanding the risk-reward tradeoff before investing
• Tax optimization - Certain investments offer savings in tax, it would be recommended to including such investment avenues in the portfolio