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6 Characteristics of Successful Investors – Part I

Have you ever wondered what makes super investors like Warren Buffett, Peter Lynch and Walter Schloss stand out from the rest of the investment public? Well, not only do they employ a sound investment strategy, they also have fundamental characteristics that help them make better investment decisions.

In this article, I explore six characteristics that we need to develop to become successful investors. I have split this article into two parts.

Characteristic 1: They have good control of emotions

Emotions are part and parcel of being human. For instance, most investors will feel disheartened when their investments go down. This is an inevitable aspect of investing that we cannot avoid. However, what we should not do is let our emotions control our decisions. Making emotional decisions to chase losses or to sell because of fear can lead to disastrous investment choices.

Recently, I wrote an article on what investors can do to ensure that their emotions do not play a part in their investment actions. There are three simple steps that I highlighted. These are 1) writing down your investment thesis, 2) having a game plan and sticking to it, and 3) to constantly educate ourselves.

Characteristic 2: They are constantly learning

Learning is a life-long journey. Good investors should, therefore, strive to keep improving themselves by reading and learning from other successful investors around us.

Warren Buffett is famous for reading a lot. He spends on average four hours a day reading and educating himself on what is going on around the world. Even with the vast amount of knowledge he already has, he is still humble enough to realise that there are still things he does not know and can learn from others.

As investors, we must adopt a similar mindset to our investing. By continually reading and increasing our knowledge, we can make better investment decisions in the future.

Characteristic 3: They are extremely patient

“It’s waiting that helps you as an investor” –Charlie Munger

Patience might be the most under-valued component that any long-term investor needs to have to be successful. If you want overnight success or riches, then it is better to look elsewhere.

Stocks are highly volatile in the short-term but tend to rise over the longer term. Investors who are not patient may end up making rash decisions like selling at a low or not waiting long enough to see the investments reap their full potential.

The Foolish bottom line

There are investors of all stripes who invest in the stock market. Unfortunately, most retail investors tend to make less than the market as a whole. This is because of poor investment philosophy and not having the correct mindset when it comes to investing.

To be able to stand out from the rest and make plus-sized returns, we should adopt these three characteristics that can make us better investors.

Meanwhile, for more (free!) investing insights, sign up here for your FREE subscription to The Motley Fool's investing newsletter, Take Stock Singapore. It will teach you how you can grow your wealth in the years ahead.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice.