7 Basic Tips To Help You Be A Better Investor
You don’t need to be a genius, if you want to be a good investor. Actually, investing is boring and dummy thing and everyone can do it! You need to stick some rules and have some discipline, but it’s not rocket science at all. Here are some basic tips, that can significantly improve the performance of your portfolio. They are so simple and trivial, that many people would ignore them thinking they are too obvious to be true. But they are and can have some substantial effect on your returns.
Don’t forget about fees!
Investors often don’t pay much attention to fees, but they have to. Fees can be substantial break for your return on investment, especially in the long run. If you invest a smaller amount of money, fees can reach 1% of each deal and even more. This means you lose this percentage for sure. If you trade actively, fees can add up to a decent amount. One day I decided to calculate all the fees I paid during the year last, they were around $1 345. If I invested this amount every year at 7.5% for 10 years, I would have made $21,799.92 just from my fees (you can calculate this yourself here). It’s calculated, that reducing your fees with just a percentage can increase your return with more than 20% in the long run.
Don’t get overproud by the bull market.
When the market is bullish and you have long positions, watching your earnings grow can muddy your mind. You may start thinking that you are a genius and you may even beat the market for a while. You may think that it’s because your investing skills are great, but it’s not. This can, and in most cases will, make you take a larger risk than you can afford and you will end up loosing money. Don’t get blinded and know that the market can give, but it also can get from you. Especially is you lose discipline and get overconfident. There are just bull markets, and there are bear markets.
Don’t constantly try to catch all market moves.
Many people try to always invest in the hottest stocks on the market. They have a good analyzed position and it’s not moving much. They see a stock going through the roof and they decide that they don’t want their carefully judged position anymore. They want the rocket. So, what they do it to close their ‘good’ position and buy the sharply rising stock. Although this may turn out to be profitable sometimes, this is not the right thing to do if you are investor (not trader). You should pick your position carefully and stick to them. Nobody can predict exactly which stock will go up and which will go down. Changing your position too frequently not only will increase the cost of your investing, but also you will avoid reaping the profits from your carefully planned holdings. Investing is a marathon, not a quick run.