Do you make these seven bad habits when investing?
We all have bad habits. The problem is that bad habits can have a serious impact on your well being.
Think about the effects of smoking, if you keep doing it, you'll end up with a respiratory disease that could lead to your early death.
The same applies to your investing. There are certain bad habits that are common to investors. If you don't stop these bad habits, it could destroy your investment portfolio.
That's why I want to make you aware of these bad habits, so that you can avoid them, stop them and stand a better chance of long-term investment success.
Seven habits to avoid on your path to investment success!
1. Falling victim to Fear’s persistent attacks
Fear prevents you from acting rationally, and might prompt you to sell out of a winning position, or to sell out of a position without giving it a good chance for success.
2. Listening to Greed’s vicious whisper
There’s not much more to be said about greed. This is perhaps the most damaging emotion in the world of investment. Many an investor has lost it by aggressively chasing the big payday. If you’re disciplined you’ll be able to take the appropriate actions and avoid falling victim to this basest of human emotions.
3. Getting ‘trampled’ by the herd
Following the herd is one of the easiest ways to get into trouble. I’ll bet you remember your teenage years, when you used to do things because your friends were doing them. Now that you’re an experienced investor you want to avoid this kind of activity. You can go along with the herd provided you’ve completed the analysis and it makes sense to do so.
4. The real danger of falling in love with a share
Love too can play a role in your investment game. Many new investors get so caught up in their share analysis and studies of a particular company they fall in love with the share. From this point, the game of investing becomes a dangerous one. Avoid falling in love with a share because it makes it difficult to sell the share when the time is right. Here’s a third emotion to avoid. By now it should be quite clear emotion and investing don’t mix!
5. Going to extremes
This is never a good idea in life – and likewise is not a great idea in the investment world. You need to maintain a balanced portfolio and so should never follow a particular idea or trend to the exclusion of all others.
6. Getting stuck on beliefs
You can’t afford to take a stubborn view on the market or any aspect of your investing. You’re investing to learn – and you learn by continually improving your knowledge. If you hold onto a belief that’s wrong you’re going to do tremendous damage to your portfolio. Be open to change – because change is where the profit is.
7. Losing touch with the market
I’m sure you’ve all heard the expression “Ignorance is bliss!” This saying has no place in the investor’s vocabulary. You must stay up to date with news on the companies you invest in. You need to make sure you watch the share price on a regular basis. You also have to be ready to take action if any of your investment rules require it. A stock market investor can’t simply walk away from his portfolio.