Every wise investor wants to be a better investor. Even the best in the world seek to constantly hone and refine their craft so they can become better. These tips are simple, though often overlooked, and they will help you become a better investor.
1) Step Away from Your Portfolio
Its not easy. It might be downright difficult. But the more time you spend dwelling on your portfolio, the more likely you are to make changes that are costly and unnecessary. In fact, if you keep an eagle eye on your portfolio, youre going to go insane over every bump or dip in the road. Dont over monitor your portfolio. Its as simple as that.
2) Avoid Emotion-Fuelled Decisions
Investing should never be a reactionary event. Avoid making decisions based on fear, doubt, uncertainty, or elation. Be methodical in your investment actions and have a system in place for vetting investments whether youre buying or selling. Have a system and follow that system for every buy and sell order.
3) Understand that Time and Money Are Equally Valuable (and Finite) Resources
The closer you get to retirement age, the more valuable both time and money become. Its important to begin scaling back lifestyle and spending in order to accommodate your new financial reality. Its equally important to understand that you typically have a set amount of money to last a specific, rather than infinite, amount of time.
Find a way to conserve both resources as people are living much longer after retirement than they have in the past. The closer you get to retirement, the more important it becomes to take care of financial matters by doing the following:
* Pay off your mortgage
* Eliminate credit card debt
* Stop relying on credits cards
* Adjust lifestyle spending
* Consider downsizing your home and auto
* Reduce wasteful spending
4) Ignore the Hype
Some people call it shiny new object syndrome. Whatever you call it, you cant be a leader as an investor if youre following every twisty or turning trend the crowd jumps on. Follow your investment plan. Make sound investing decisions based on the criteria youve established and not on what it looks like everyone else is doing. Otherwise, you might all find yourselves walking around shirtless.
5) Invest in Quality
Look for quality investments that meet your criteria and resist the temptation to lower your standards in order to just make an investment. The right investments are the ones youre looking for, not the first one to come along.
6) Take Responsibility for Your Investments
Dont invest in things you dont understand just because others, even people you respect and admire, are doing so. Take the time to learn about the investments you make before investing in them and then make investments based on the plan you created for investing from the start.
7) Take Small Steps before Making Giant Leaps
Before diving into the shark-infested waters of stocks, bonds, and mutual funds, take smaller steps that include 401(k) plans, IRAs, and similar, stable retirement funds. Get your own financial house in order before diving into the big leagues of big time investing.
8) Dont Expect Instant Results
Investments are not about instant riches or instant wealth. Youll hear the term, Its a marathon; not a sprint often in the world of investing, because its true. The odds of striking it rich instantly are even worse than the odds of winning the lottery neither of which are good for anyone with reasonable, long-term investment goals.
Once you get these steps down, youll find that you are the better investor you want to become. At that point, youll want to raise the stake and look for new areas where improvements can be made.