There are many people in the UK who have become millionaires by investing in ISAs. I've studied the main characteristics shared by these ISA millionaires closely and I've come to the conclusion that most have 10 key traits.
We looked at the first seven of these traits in two recent posts. This time we'll examine the final three traits of an ISA millioniare.
Traits of an ISA millionaire #8 - Being active
Most ISA millionaires aim to buy and sell their investments at the right time. In other words, instead of using a buy and hold strategy, they are active. Because they have a goal to ‘beat the market’, they tend to keep hold of their chosen investments as long as they are outperforming.
ISA millionaires believe that buy and hold is a flawed strategy, and a good example involves a period of time in the late nineties. In 1999 the stock market was roaring and investors had just experienced a twenty year upward trending bull market. However, at the end of 1999 many small investors who didn’t know how the market works were unfortunately investing right at the market top. That’s not good news for buy and hold investors who bought at the wrong time. These investors who bought at the top of the market in 1999 and held will still be in a loss today.
Traits of an ISA millionaire #9 - Keeping control of their emotions
ISA millionaires tend to ignore the noise and the news and instead focus on what the market is actually doing. They do this by carefully studying the price and volume activity of institutional investors. Knowing what institutional investors are doing with their money, and what this means for the market going forward, helps ISA millionaires to become excellent at managing the stress that comes with investing into the stock market.
ISA millionaires embrace the two investing contrarian principles of:
- When everybody is positive and excited about the market, the market could be close to a top. That means it could be time to move into a cash park.
- When everybody is negative and depressed about the market, the market could be close to a bottom. That means it could be time to be invested in quality aggressive growth funds.
ISA millionaires handle their emotions well and one way they do this is by viewing their losses as a ‘temporary’ inconvenience. They understand that temporary losses are normal and natural. They know that their aim of beating the market will automatically increase their volatility in the short-term.
ISA millionaires believe that unless they experience this volatility, they are not going to be able to outperform the market over the long-term. Temporary losses are therefore part and parcel of the game. ISA millionaires believe that you can only win in the long-term if you accept volatility, risk and temporary losses in the shorter term.
Traits of an ISA millionaire #10 - They never quit
ISA millionaires persist. They never give up. Even if they have not achieved their goal by their given deadline, they stick with it.
ISA millionaires began their journey to seven figure tax-free status by making the decision that they would never give up no matter what.
Their belief is:
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As long as you refuse to quit, you must eventually be successful.
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The longer you persist, the more convinced and determined you become.
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By persisting, you finally reach the point where nothing can stop you.
What would an ISA millionaire do if the deadline for their goal was ten years and they didn’t make it in time? The answer is simple, they keep going and never give in. Persistence is the one trait that plays a huge part in helping ISA millionaires attain their goals. They develop an attitude of ‘I will never quit and never give up.’
Winston Churchill was once asked to give some advice to a business school on how to be successful and he stood up and said, “Never, never, never, never, never, never, never, never, never give up,” and then he proceeded to sit back in his chair.
Please note past performance should not be used as a guide to future performance, which is not guaranteed. Investing in the Funds should be considered a long-term investment. The value of the investment can go down as well as up and there is no guarantee that you will get back the amount you originally invested.
Useful links:
The 10 traits of an ISA millionaire Part 1
The 10 traits of an ISA millionaire Part 2
About ISACO
ISACO was established in 2001 by brothers Stephen and Paul Sutherland and is the first financially regulated firm to offer adventurous ISA and SIPP investors a unique personal investment service that shares on a daily basis our star-performing investor’s thoughts, personal insights and investment decisions.
Clients enjoy being informed throughout the year what ‘best of breed’ funds our premier investor currently owns, when he’s buying and when he’s moving into the safe harbour of cash – helping clients enjoy more control, manage their portfolio more effectively and benefit from the potential of outstanding long-term returns.
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