5 Nuggets To Keep You Smiling As An Investor
How often do you jump into an investment thinking that you have entered when the market has probably reached its pit bottom only to realize the next few days that it was otherwise? Time and time again, the reality is often not what you think of it to be.
So how should you approach your investment decisions that will let you keep your sanity and smile?
Here are 5 “D”s to bring back that investing smile…
1. Detach – Do not let your emotions or fear jeopardize your investments. There will always be news and there will always be bad news. Often, these news don’t have any long term impact on your investments. Never let your emotions go on any unnecessary roller coaster with the events of the day.
2. Dollar Cost of Averaging – Be humble and accept that the chances of you being able to outsmart the markets is extremely low. Averaging out your investing by investing regularly over a long period of time will ensure that market volatility will be more of a friend rather than a foe.
3. Diversification – What will happen when you put all your eggs in a basket and then accidentally dropped it? Diversify in as many ways as you can. No one can say that they are completely sure when it comes to investing so there must always be room to spread our bets.
4. Distance – Think investing like you would be thinking about doing a marathon. Think long term. You’ll be amazed how much better your short term decisions will be when you take them with a long term horizon.
5. Do It Now – Time and tide waits for no one. There is never a better time than now because having time is your biggest advantage in investing. It allows you to hold, to think long term and to make changes. Every moment of procrastination is wasting away your most valuable resource and how much can you really waste?
One additional reminder – an investor’s behavior after making an investment is as important, if not more important than all the research prior to doing it. The ability to stick to the plan and the discipline to manage emotions play a very important role in the success of an investment plan.
You may not be able to control everything that happens but one thing you have full control over is yourself. Start by making a commitment to enjoy the journey of investment and keep smiling…
Article by Pamela Chong, ChFC
(NOTE: Use our free calculator to help you calculate your investment returns, especially if you have invested in Unit Trusts and Investment-linked Insurance Policies. Get yours here)