Patience As An Asset For Investors

As an investor, patience is a key virtue and asset that you must possess as it can be the difference between success or failure.

Patience is one word that could mean many things depending on the context in which it is used. For some, it could be the ability to endure difficult circumstances; it could mean tolerance, it could mean restraint, and it could mean delayed gratification.

For the investor, patience means all of these things and more.

One easy way to fail as an investor is to constantly be in a hurry to cash out. Sometimes, it is not about how good the stock you invested in is but in how well you can stay and ride out the fluctuations of the stock market.

This trait is particularly found in rookie investors who see investing as something that can be timed and profited from in just a few years. There is a level of discipline required to become an investor and even more required to be a successful one.

This ranges from having the funds to set aside to invest to being able to push aside emotional inhibitions like desperation or greed. Patience is a form of financial discipline and it requires the investor to be in total control of his or her actions.

Impatience impedes investment growth as the investor would end up sacrificing sustainable long term gains of wealth creation for short term profits.

To practice patience, the investor must first shift his or her mindset. Coming into the investment world as a way to fund your expensive lifestyle would make you inpatient.

On the other extreme side, investing with immense fear can also make you panic and lead to irrational decisions that would ultimately lead to losses.

Beyond shifting your mindset, it is important to have a plan. Without a plan, any form of investment gain would be seen as a viable opportunity to make gains. However, when you know where you’re going, you would be able to make better investment decisions and stick to the plan.

A plan would shield you from the anxiety of investing and curb impatience. It is important that you do not project your fears into the future of your investment. Focus on what is happening as opposed to what can happen. This doesn’t mean that you hang on blindly.

It just means that all decisions come from a place of understanding/ knowledge and not fear or greed. Also take relevant steps to assess your investments periodically.

A way to ensure your mindset is good and you follow through with the plan to the end is to hedge your risks. Diversifying your investments would prevent you from timing the market as your portfolio is balanced and moving along a steady trajectory.

Another thing is to be very careful with comparing investments. Do not be in a hurry to go for what looks like the next best thing. When comparing, compares likes with likes. A 50-year old company has completely different peculiarities from a 10-year old company.

Be careful with the kind of information you entertain. Not every information from any source requires you to make changes to your portfolio.

The patient investor is often the one with the best stories to tell at the end of the day. Do not compromise on your goals for mere noise.

Written by Lawretta Egba.