What have successful investors like Warren Buffet done to achieve the spectacular returns they have generated over their lifetime? How do they react to the various pitfalls during the course of their investment journey? How do they tackle market excesses and what sets them apart? We look here at the three Pillars of investing – Planning, Processes and Products and understand how the successful investors crack the code to win the game of investing.
Planning – Building a strong foundation
Just like in any scenario, planning is a critical task. Successful investors break down their goals with an actionable timeframe. Imagine driving without knowing your destination, you will reach nowhere for sure. It is important to have realistic goals; you can’t reach the moon even if you have the most powerful Ferrari. Size up your goals and build resources that will help you reach your destination. The right plan is the foundation to build your skyscraper.
Processes – Plans need to be implemented
The best of the plans are useless if they don’t get implemented. Implementation gets easier with the help of solid processes. Successful investors understand this and have clear cut strategy to help them achieve goals. They seek professional guidance that helps them avoid emotional interferences and take decisions fast. They have a rule book to swear by and seldom deviate from ground rules. They understand asset allocation, valuation and rebalancing, and have fine-tuned processes to help them construct portfolios that suit different situations.
Products – Planting the right seeds
Mangos don’t grow in banana plantations. Successful investors do their homework well by collecting all relevant information. They have their facts right and use sound reasoning to take investment decisions. They do not hesitate to reach out to various experts to understand the nuances if they are not clear on anything. They nurture with great care; continuously monitoring and de-weeding their portfolio by throwing out the bad ones and give ample time to ensure their investments flourish to yield the desired fruits.
Smart investors carry a variety of ammunition in their armory and use them depending on the upcoming warfare. They delegate tasks and focus on small improvements and understand the impact of compounding on the growth of their portfolio. They keep away from market clutter and seldom get worried by what others are doing. Just like Warren Buffet, they restrict themselves to their circle of competence which protects them from taking foolish decisions and thereby save tons of money. So go ahead and implement these in your journey and grow wealth!!!