4. Smart investors keep emotions in check
They understand that emotional demons can be a major cause of unsuccessful investing. People who follow the herd and buy in at the top of the market and sell at the bottom, when they are distressed and worried that things are not going their way, always lose out. Smart Investors understand the market and do not let their emotions affect their investments in rising or falling markets. |
5. Smart investors plan for and understand inflation
Inflation eats away at your investments – no matter where you are invested. Assuming an average inflation rate of 4%, £100 today will be worth £54 in 15 years time. Many investors therefore suffer from money illusion. They think just because their savings in the bank do not go down (or go up a little bit with interest), that they are making money – unfortunately that is nearly always not the case. The fact is, by leaving money “under the mattress” – or even in a deposit account in the bank, it is almost always declining in real value – even if the numbers do not go down! Smart Investors understand this and also do something about it. |
6. Smart investors understand the power of time
This may seem fairly obvious but should not be under-estimated. For example you may need £150,000 (in real terms) in 20 years time. Making some assumptions, you would need to save about £400 per month to get there. If you waited 10 years, giving yourself only 10 years to achieve your goal, you would need to save £1,000 per month, based on the same assumptions. By starting early, smart investors understand that they have a much, much higher chance of being successful. | 
