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Why a Proper Focus & an Investor Mindset is a Must for Success in Equity Investing?

Here are few dos and don’ts which are imperative when trying to build an investor mindset:

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Stock markets are symbolic of enormous wealth creation. Yet surprisingly, there are contrasting stories. On one side while there are success stories of investors who went on to amass huge fortunes and build huge empires, on the other side there are countless stories of investors who are not able to make it and incur huge losses. The reasons for this may be numerous but the biggest reasons of all is a lack of proper focus and an investor mindset.

Here are few dos and don’ts which are imperative when trying to build an investor mindset:

  1. Don’t let your investment decisions be ruled by your emotions

Many investors experience emotional biases while investing and end up making wrong investment decisions that are detrimental to their portfolio. When markets are in a bearish mode, investors often lose their patience and sell their stocks for a loss, trying to make the most of what they can. On the contrary, when markets are in a bull run, many investors blindly enter the market, hoping to cash in on the bull run without bothering to check the fundamentals of companies before investing.

Having a sturdy head on the shoulders is important and keeping a check on emotions can prove to be beneficial in the long term.

2. Give time for your investments to realize their true potential

Significant wealth from equities cannot be made in a short period and this is a cardinal rule of possessing an investor mindset. 

Wealth creation from stocks is not an overnight process and takes time. When you give time to your investments, you are essentially giving time to the company behind the stock to grow and realize its true potential. And when the company does well, its stock price automatically follows. It’s crucial to have patience and observe the market to be able to become successful. Rome wasn’t built in a day, and neither will your fortune.

3. Don’t just follow what everyone else in the market is doing

Are you investing in stocks based on recommendations of generic sources who themselves depend on the advice of others? As most of these recommendations are irrational, the possibility of ending up with heavy losses is very high. 

While following the investment advice of others, many investors overlook the fact that the risk and goals of each investor are unique. As each investor has a unique risk appetite, financial goals, and horizon for investment, their portfolio should also be designed keeping in mind their long-term goals.

4. Do not ignore the fundamentals  

It is said that ‘half knowledge is dangerous’. Many investors tend to ignore the fundamentals and invest in stocks that are currently trending. When the market corrects, stocks riding only on euphoria witness massive corrections and sometimes never recover.

On the contrary, fundamentally sound companies with strong financials can withstand any kind of market volatility over the long term. Such stocks are usually the first to recover after correction and outperform in the due course of time.

5. Do not frequently churn your portfolio

Are you buying and selling stocks at regular intervals? It is important to note that this is something which serious investors never indulge in. 

Once you invest in the right businesses, it is very important to stay away from the temptation of small profits or the fear of notional losses. Rather, one should stay invested by focusing on the bigger picture. Frequent churning of your portfolio also means higher costs due to recurring brokerage and taxes.

While investing in equities proves to be lucrative, a significant number of investors do not taste success due to the lack of an investor mindset and a sharp focus, which ends up being detrimental to their investments. By incorporating some small changes in their mindset and investing strategy, any investor can chart a successful path in the journey of investing.

Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.

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Manish Goel

Manish Goel is serving as the Founder - Director at Research & Ranking. He is a qualified Company Secretary, a Law Graduate and Masters in International Trade and Finance from United Kingdom. He has more than a decade of experience in nurturing teams and growing businesses successfully from a start-up stage.

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