Part 2: Should You Invest?
HtM+ 004: Understanding Risk
THE NEW INVESTOR
A step-by-step guide to investing for well-grounded people. My fortnightly (bi-weekly for American readers) letters will take you from beginner investor to managing your portfolio well by the end of the year.
Understand how much your attitudes and behaviours determine your success.
MONTTY’S RULE #4
Attitudes + Drivers = Outcomes
Anatomy of a Good Investor
A good investor, in my opinion, has 3 defining traits:
The right attitude
Attitudes, Drivers and Outcomes will inform your investment strategy.
The right attitude: although the quiz was presented in jest we cannot downplay the importance of attitudes when it comes to our finances in general or investing. The right attitude (relative to you as a person), is one that recognises the value of, but also the limitations of investing as a vehicle for wealth building.
Sensible drivers: having realistic expectations about what is achievable when you invest. The key here is understanding the difference between time and timing. The Good Investor recognises the value of time, sees time as a friend and isn’t interested in participating in speculative market timing1.
Defined outcomes: a clear set of goals to focus on. This is critical when you go through volatile periods when the temptation is to do what feels instinctively right but counter productive to wealth building2.
Keep reading with a 7-day free trial
Subscribe to Montty’s Notes to keep reading this post and get 7 days of free access to the full post archives.