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10 Habits of an Intelligent investor

ICICIdirect 8 Mins 09 Aug 2023

Investing is both an art and a science. If you are from a science background, you know that understanding the concepts is one thing, and implementing them is a different ball game. Similarly, if you take on any art form, mastering it requires months and sometimes years. 

With this knowledge, we can say that learning to invest is not one of the easiest things to do. It requires a combination of multiple things: discipline, knowledge, and strategic thinking. You need to be an intelligent investor to make the most of the markets. The best thing, like in any other science or art form, is you can learn to invest. Let us look at the ten habits of intelligent investors. 

10 Habits of intelligent investors

Below are ten habits that you will find in most intelligent investors. If you don't have these habits, you can start working on it. The sooner these become part of you, the faster you will see success:

Habit 1: Willingness to continuously learn

Knowledge is power, and most intelligent investors have an ample amount of this power. They are avid learners who keep themselves informed about financial news, economic trends, and market dynamics. Also, they will read books, watch videos or listen to podcasts to understand the market and the investing process. They will learn about new investment opportunities and evaluate which ones to avoid to reduce risk. 

Habit 2: Long-Term Vision

Investing is a long-term game, and an intelligent investor has a high clarity that he has entered the field to stay long. He possesses the wisdom to see beyond short-term market fluctuations. They focus on the bigger picture, understand that wealth accumulation is a gradual process. The long-term perspective helps them resist the urge to make impulsive decisions and ride out market volatility

Habit 3: Thorough Due Diligence

It refers to the comprehensive and meticulous process of researching and investigating an investment opportunity before deciding to invest. Intelligent investors conduct a detailed examination of various aspects of the investment, including its financial, operational, legal, and market-related aspects. The purpose of thorough due diligence is to gather all relevant information and insights necessary to make an informed and well-reasoned investment decision. Intelligent investors have a clear and accurate understanding of the investment's potential risks, rewards, and overall viability. 

Habit 4: Emotional discipline

In the face of market turmoil or euphoria, intelligent investors remain emotionally disciplined. They avoid being swayed by short-term emotions, such as fear or greed, that often lead to irrational investment decisions. Instead, they rely on data, analysis, and a well-defined strategy.

Habit 5: Thorough Research

Most investors are unable to make returns even after being in the market for years. However, intelligent investors start getting returns much sooner. The reason is all their investments are well-researched. They conduct thorough research before making investment decisions. It involves analyzing financial statements, studying industry trends, and understanding the company's competitive position.

Habit 6: Diversification

Intelligent investors utilize diversification as a strategic tool to manage risk and enhance the stability of their investment portfolios. Diversification involves spreading investments across assets, industries, sectors, and geographic regions to minimize the impact of poor performance in any single investment. 

Habit 7: Understanding the power of compounding

Intelligent investors grasp the transformative power of compounding, realizing that even small, consistent investments can lead to significant wealth growth over time. They comprehend that the process involves reinvesting earned returns, allowing both the initial investment and accumulated profits to generate further earnings. The compounding effect intensifies with time, emphasizing the importance of starting early and maintaining a long-term perspective. By being patient, and disciplined, and making informed investment choices, intelligent investors harness the compounding magic to build a sturdy financial foundation for their future endeavors. 

Habit 8: Invest in what they understand

They adhere to the principle of investing in only what they understand. They recognize that thorough comprehension of an investment's underlying mechanisms, risks, and potential rewards is essential for informed decision-making. By avoiding complex financial instruments or industries they lack familiarity with, intelligent investors minimize the risk of making uninformed choices driven by speculation rather than sound analysis. It helps their investments align with their knowledge base and allows them to make strategic, well-reasoned decisions that contribute to their long-term financial success.

Habit 9: Regular Portfolio Review and Adjustments

An intelligent investor's work doesn't end after investing. They regularly review their investment portfolio, assessing performance and rebalancing as needed. This particular habit ensures that their investments remain aligned with their goals and risk tolerance. Risk tolerance can change with time, and intelligent investors ensure their portfolio is always aligned with their risk profile. 

Habit 10: Consistency and Patience

Consistency is the cornerstone of successful investing. Intelligent investors adhere to their investment plans regardless of market conditions. They understand that wealth creation takes time and are willing to patiently wait for their investments to bear fruit.


How many of the above habits do you have? Even if the count is less, as mentioned earlier, you can work on it and develop these gradually. Becoming an intelligent investor requires dedication, education, and commitment. By adopting these ten habits, you can pave the way toward achieving financial success and security. The journey will not be without challenges, but the rewards of disciplined and informed investing are worth every effort. 

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