My Investment Habits: From 2019 to date

Persona: I am a young professional with a family aiming for financial freedom, adopting good investment habits is crucial. Here’s a list of 20 investment habits I follow which have helped me build wealth over the last few years:

By following these habits, you can create a solid foundation for building wealth and moving towards financial freedom. Remember, consistency and patience are key in the journey of investment.

1. Invest in Yourself: Your ability to earn is your biggest asset. Invest in your education, skills, and personal development.
2. Maintain a Long-Term Perspective: Focus on long-term growth rather than short-term fluctuations. Avoid frequent trading based on market movements.
3. Start Investing Early: We started investing early, the more time your investments have to grow due to compounding interest. We both opened 401-K since our first employers and began our compounding journey as early as we could. Additionally, we max out our employer contributions to our retirement plans.
4. Reinvest Dividends and Capital Gains: Reinvesting dividends and gains can significantly boost your investment growth over time.
5. Regularly Save a Portion of Your Income: My wife and I save and invest a consistent portion of our income, approximate 20-30% of our annual salaries not including our 401-K plan contributions.
6. Avoid Emotional Investing: Don’t let emotions dictate your investment decisions. Fear and greed can lead to poor choices. (I barely sell and I am patient and keep funds available to buy when others are selling. I regularly do this.)
7. Create and Stick to a Budget: Managing your expenses and allocating more towards savings and investments is essential. We do not keep up with the Jones’s and we make sure to say it from time to time. We treat any medium to major purchase with care and carefully consider if we really need it. (ex. Many times, there is an initial impulse, and after we gut check it, we realize that that new Apple headset is nice, but the Beats headset I have is from two years ago is still like new and I barely use it. Why would I need to buy a new one for $500. Crazy, it was just an impulse.)
8. Build an Emergency Fund: Before heavily investing, make sure you have an emergency fund, typically 6-12 months of living expenses, to handle unexpected situations. (I tend to say more is better in this area since the 2008 financial crisis taught me a lot from being at home with both my parents without work for nearly a year.)
9. Diversify Your Investments: Don’t put all your eggs in one basket. Spread your investments across different asset classes and have a plan for diversification withing the asset class itself. (For example in equities, buy growth stocks, as well as REITS, BDCs, Utilities, etc. Additionally, I invest in Stocks, Bonds, private Real Estate Platforms, etc.)
10. Understand What You Invest In: Invest in businesses and assets that you understand and avoid complex investments that are beyond your comprehension. (I created this blog to publish the research and lessons learned that I follow in growing my own portfolio.)
11. Avoid High-Interest Debt: Pay off or avoid high-interest debts like credit card debts, as they can erode your savings and investment returns.
12. Use Tax-Advantaged Accounts: Maximize contributions to retirement accounts like 401(k)s and IRAs, which offer tax benefits.
13. Keep Investment Costs Low: Be mindful of fees and costs associated with investing, as they can eat into your returns.
14. Automate Your Investments: Set up automatic transfers to your investment accounts to make the process consistent and hassle-free.
15. Stay Informed, but Avoid ‘Noise’: Keep abreast of financial news but avoid reacting to short-term market fluctuations and ‘hot tips.’
16. Regularly Review Your Financial Goals: Your financial goals may evolve over time. Regularly review and adjust your investment strategies accordingly.
17. Learn from Successful Investors: Read books, listen to podcasts, and follow the strategies of successful investors.
18. Balance Risk and Reward: Understand your risk tolerance and invest in a way that balances potential returns with acceptable risk.
19. Invest in Quality Assets: Focus on high-quality investments with a track record of stability and growth.
20. Review and Rebalance Your Portfolio Periodically: Regularly check your investment portfolio to ensure it aligns with your goals and risk tolerance, and rebalance as needed.

By following these habits, you can create a strong foundation for building wealth and achieving financial freedom. Remember, consistency and patience are key in your investment journey.