If you’ve read our seven sins of investing blog and want to know if there’s another side to that coin, then you’re in luck. As good as it can be to ensure you’re avoiding as many bad habits as possible, it’s always worth finding out what good habits and virtues can help to enhance your prospects when investing. Here are seven virtues which could make your investment journey an easier road to travel.
The virtue: Faith
Having faith is one of the hardest virtues to maintain, especially if you’re investing at a time when the markets are a bit bumpy. Times have changed a bit, and although the investments in your plan are often called your ‘holdings’, the majority of investors never physically touch any of their underlying investments. There are exceptions, of course, like if you choose to directly purchase investments like gold or property.
These aside, investing relies on a lot of faith. You have to know that even though you can’t see them, your investments are there and are constantly working. If you’re investing using funds, then you also have to have faith that the fund manager is doing their due diligence, managing each investment, and keeping the fund on track.
The virtue: Hope
Having faith is great, but having hope is better. It can be far too easy to be cynical and pull your money out when the markets turn, but a hopeful investor would hold true and wait for their long-term investment strategy to come through. Being optimistic and being realistic isn’t the same though, and understanding the difference is often a matter of research and perspective.
But hope can also relate to investing in specific areas or companies. If you hope that a start-up or disruptive business is going to succeed and you choose to invest in it, then that could pay off in the future if the price of that share rises. But remember returns aren’t guaranteed with investing and there’s a risk you could end up with less than you initially put in.
The virtue: Charity
You may be thinking that charity and investing don’t really go hand in hand, but with investing it’s possible to have a positive impact on the world. By investing ethically, the aim isn’t just to make profits, it’s also about making a difference and supporting businesses that are committed to giving back to the community.
You could also consider it charity to help your future self. Think of it as delaying your spending to a time when you need it most – like retirement. When you’re no longer working, and therefore not earning, putting money away now to spend when you’re older is almost a form of charity. You could even tie the two in together and consider opening an ethical personal pension, providing you with an income later in life while using your money to do good.
The virtue: Fortitude
Investment legend Warren Buffet is quoted saying, “Be fearful when others are greedy and greedy when others are fearful.” If that’s not the definition of fortitude in investing, then we don’t know what is! But fortitude could be the key to success. After all, it’s time in the market, not timing the market that could provide you with greater chances of success.
Don’t get us wrong, buying investments when the prices are falling is what fortitude is all about. But these changes are unpredictable, often illogical, and are driven by a huge number of different things. So, if you’re waiting for the markets to fall, then you could miss the boat entirely. Or, if you’re already invested, selling when the markets fall could cement your losses. Having the courage to stick by your investments even when times are tough could pay off in the long run.
The virtue: Justice
Being fair and equitable with others is critical when investing, but it is particularly important for ethical investments. When it comes to investing ethically, knowing that businesses and organisations are acting fairly and are correctly punished for failing to comply with the rules can be a driving factor for many investors. In the world of investing, there are even thematic funds you can choose to ensure that you’re investing in line with social justice.
You may be surprised to learn that the motto of the London Stock Exchange is ‘Dictum Meum Pactum’, or ‘my word is my bond’. Justice and honour in investing are ingrained within the system, being scrupulous with all transactions and instilling trust and respect towards both investors and businesses alike.
The virtue: Prudence
When investing, being reckless could be your downfall, so it may pay off to exercise prudence when making decisions. It may sound like common sense, but the best approach is often to try and take the right action, at the right time, based on all the information that’s available to you. Taking your time to digest and understand the situation before making a judgement could save you from making a big mistake.
But it isn’t just big decisions either. Being prudent in the day to day management of your investments can also be a good idea. Carefully looking at how often you’re rebalancing and doing an ample amount of research on each of the investments in your plan. Or, if you use a robo-investor like Wealthify, make sure you’ve balanced the competition, understood the fees, and chosen to invest in a way that best suits your needs.
The virtue: Temperance
Temperance is essentially self-restraint, easing yourself back from what you really want to do because you know that in the big picture it’s probably not good for you. For example, temperance is not eating an entire cake in one sitting even though the chocolatey goodness is so moreish. Taking the same approach to your investments should steer you towards being a bit more careful and moderate with your money.
Slowly but surely is a welcomed approach with investing. One benefit is that you can take advantage of pound cost averaging, and potentially reduce the bumps in the road on your investment journey. But it also means that you’re less likely to try and invest more than you can afford or choose an investment strategy that takes on more risk than you’re happy with.
Investing in a way that’s right for you is essentially the virtue of temperance, and it’s exactly what we aim to offer all of our customers at Wealthify. We have five investment styles to choose from, letting you be a Cautious or Adventurous investor – or perhaps pick somewhere in between. We also offer ethical and original investment plans, giving you the option of staying true to your values. And finally, we have low fees and give you control over how much you invest, lots or a little, it’s all up to you.
The tax treatment depends on your individual circumstances and may be subject to change in the future.
Please remember the value of your investments can go down as well as up, and you could get back less than invested.