Six habits of successful investors (and how to form them)

Building sound habits is key to success in every field and investing is no exception.

Healthy, repeatable behaviours offer investors armour when markets seem unfriendly. Conversely, bad habits can leave you vulnerable to poor decision-making.

Here we set out some of the behaviours we think might just help in your quest to be a better investor.

The challenge is how you form those habits. The book, Atomic Habits, has become something of a bible on establishing positive new behaviours. Tips from its author, James Clear, include the two-minute rule - do something regularly for two minutes and build up over time.

Similarly with his 1% rule, applying even a small effort results in significant improvement - being 1% better each day snowballs as you get gains on yesterday's gains.

He also suggests new behaviours can be made to stick with four rules: make it obvious, make it attractive, make it easy, make it satisfying.

With some of this in mind, we set out some desirable habits that investors might want to nurture.

Habit 1: Be a planner

If you’re not a natural planner, don’t give up at the first hurdle. Your plan can be as simple as identifying a single goal and then working back to estimate how much you should save. This is starting small.

Perhaps your basic plan is that you want £20,000 for house improvements that you know will be needed in 10 years’ time. Our ISA calculator shows you would need to save £137 a month throughout that decade, with modest 5% annual stock market growth, to reach your £20,000 goal. In fact, you’d be a smidgen over. Do your own sums here: Investment ISA calculator.

Once you’ve set a simple goal, you might build up to a more strategic plan – something broader.  This could encompass retirement savings from a company pension or SIPP (personal pension), and more accessible savings, such as tax-efficient ISAs. A financial adviser can be enormously helpful, particularly at certain life stages. Click here to meet Fidelity’s financial advisers.

Habit 2: Master procrastination

Deliberation is the enemy of new habit formation. There’s always tomorrow! That’s why, as suggested above, you just nibble a bit. You can, for example, open an ISA or SIPP without immediately choosing the investments to put in it. So rather than do nothing, do one thing - open an account - and then choose your investments when you’re ready.

While choosing funds to hold in your ISA or SIPP can seem daunting, there are simple options. For example, if you’re unsure, Fidelity’s Easy Invest is a simple, low-cost diversified fund option to get you started. Or Navigator will give you some diversified fund options to consider based on your goals and level of risk you’re comfortable with. For a bit more choice, our Select 50 is a hand-picked list of funds, recommended by experts.

Another ally of the procrastinator is our guide - 8 steps to permanently fix your finances.

You can also sign up for our Pulse newsletters to help build your knowledge and confidence. 

Habit 3: Master your emotions and stick to the plan

There are two main derailing dangers that will stalk your meticulous planning.

1. You don’t stick to the goal in the plan
   You may be distracted by the need for something else – a new kitchen, a property extension – that sways you into diverting money from its original destination: the investments that you’re growing for your future.  Sometimes big-ticket spending is unavoidable but always sanity check that choice against your original plan and what you wanted to achieve.
2. Emotions cloud your investment decision-making
   If you look back, over recent decades they’ll be countless times when it would have seemed a bad time to invest – at the time of the US invasion of Iraq in 2003, when banks were collapsing in 2008 or when the Brexit referendum result rocked markets.
   
   The table below shows the returns from the FTSE 100 index in the three and five years after some of the biggest one-day falls of this century. The numbers are calculated with income reinvested. Imagine the economic gloom when the first Covid lockdown in March 2020 sent the FTSE 100 spiralling down nearly 11% in a day. But the subsequent five-year market rally would have grown £1,000 to £1,988, before charges, equivalent to an annual growth rate of 14.8%.  Please remember past performance is not a reliable indicator of future returns. 

Source: Fidelity International, Refinitiv. * Return to latest day (18/02/25 – four years and 11 months)

Habit 4: Monitor progress (but don’t obsess!)

It’s a healthy habit to regularly check your portfolio – but not every day. Getting distracted by daily performance or large market moves can breed bad habits and prompt you to act rashly. Always remember the adage that time in the market is more important than trying to time the market - sometimes markets behave as you would expect and sometimes they don’t, so it’s best not to tinker.

Habit 5: Make it easy

As the rules Atomic Habits highlights, removing friction is key to building positive repeatable behaviours. In the investment world, this could be setting up a regular savings plan. Once you are paying in every month, you don’t need to think about when you’re investing and each time face a battle with the emotions we describe above. You could also make a promise to yourself to increase the amount each time you get a pay rise.

Habit 6: Be consistently tax aware

Another habit forming investor success is keeping an eye on taxes and account types - investing tax-efficiently to make the most of your money.

ISAs are one tax-efficient way to invest, offering protection from Income Tax when withdrawing, and also from Capital Gains Tax.

SIPPs, or Self-Invested Personal Pensions, offer upfront tax relief. Any contributions you make are boosted by the government. For every £80 you invest, HMRC adds £20 – and more if you’re a higher or additional rate taxpayer. There are pension tax allowances you should be aware of. The other benefits are that your pension pot grows free of UK tax and you can normally take up to 25% tax free cash from age 55 (57 from 2028), with the rest of your withdrawals subject to income tax at your marginal rate.

The bottom line

Habit formation can be a powerful tool in boosting behaviours that are good for your long-term wealth and squeezing out those that undermine your finances.

If you can make investing easier for yourself and deal with your emotional decision-making and costly procrastination, then you’ll be invested in giving yourself a better financial future.

Past performance is not a reliable indicator of future returns

Source: Refinitiv, total returns from 28.2.20 to 28.2.25. Excludes charges.

Important information - our guidance tools are not a personal recommendation in respect of a particular investment. You should regularly reassess the suitability of your investments to ensure they continue to meet your attitude to risk and investment goals. This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to one of  Fidelity’s advisers or an authorised financial adviser of your choice.