What does Atomic Habits have to do with investing?

Like a New Year’s resolution, many investors give up at the first sign of trouble, but there are ways to avoid it. By making atomic changes you can make big changes. But how do you do this and how can you apply this in your life? Alphastocks want to tell you more about this!

Investors often focus on goals that are too big

“Your outcomes are a lagging measure of your habits. Your net worth is a lagging measure of your financial habits. Your weight is a lagging measure of your eating habits. Your knowledge is a lagging measure of your learning habits. Your clutter is a lagging measure of your cleaning habits. You get what you repeat.”

James Clear’s 2018 book, “Atomic Habits,” was a New York Times bestseller and has sold more than 5 million copies worldwide. In it, Clear begins with a pretty bold assumption that big goals shouldn’t be the main focus of our lives. For many people the opposite of what they have ever been told.

Clear argues that focusing on goals can distract us from the key elements to achieving them. A lot of us set goals that are too big, too many goals with too short a time frame, so we usually don’t achieve them. I often see this with novice investors. They start investing in stocks with a large seed capital and expect immediate results. As soon as something goes wrong, they immediately withdraw, usually losing money. If they ever start investing again, they do so very carefully, usually after a bull run in the stock market.

Small atomic changes

“People make a few small changes, fail to see a tangible result, and decide to stop. You think, “I’ve been running every day for a month, so why can’t I see any change in my body?” Once this kind of thinking takes over, it’s easy to let good habits fall by the wayside. But in order to make a meaningful difference, habits need to persist long enough to break through this plateau—what I call the Plateau of Latent Potential.

The goal in any sport is to finish with the best score, but it would be ridiculous to spend the whole game staring at the scoreboard. The only way to actually win is to get better each day. In the words of three-time Super Bowl winner Bill Walsh, “The score takes care of itself.” The same is true for other areas of life. If you want better results, then forget about setting goals. Focus on your system instead.”

Rather than thinking in terms of goals, Clear believes that success is achieved by making small (atomic) changes that we do repeatedly, because those can form habits that last a lifetime.

“The more you repeat a behavior, the more you reinforce the identity associated with that behavior. In fact, the word identity was originally derived from the Latin words essentitas, which means being, and identidem, which means repeatedly. Your identity is literally your ‘repeated beingness’.”

If you’re reading this, I assume you see yourself as an investor eager to learn. But just buying a stock doesn’t make you an investor, any more than reading one book makes you a reader. I believe that investing is a lifelong activity made up of several small habits that are repeated over and over.

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The best investors do the following:

  1. Spend less than they earn
  2. Plans for their future
  3. Are curious about the world
  4. Are information junkies
  5. Thinking long term
  6. Stick to their plans
  7. Don’t be guided by their emotions

These are not habits that you can develop overnight. Small, regular actions are needed to change the behavior over time.

This article was written by AlphaStocks. Are you curious about how you can better track your investments (crypto, shares and precious metals)? Then take a look at AlphaStocks. Besides the fact that you can track your investments for free, you can also read extensive stock analyzes and various blogs!

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