Sunday, 22 September 2019

Bad Investing Habits You Need to Break

Bad Investing Habits You Need to Break

Today I want to talk to you about some bad investing habits that you need to break. Whether you are a seasoned investor or you are new to this idea of making money with your own money. There are some basic rules you should follow, and there are some bad habits you need to break. If you don't break these bad habits, these things are either are now costing you a lot of money or they are going to cost you a lot of money in the long run.

If you find yourself saying, oh yeah, that is me I've got some bad habits too, any of these examples, you should probably stop it right now, doing any of these things will only slow your progress on the way to getting rich.


1. Quit Trying To Get Rich Overnight

Getting rich quick is a very bad idea, and it's something we've all done. So don't feel bad about it, just quit, don't think that you can invest in some business and pull out of it with a profit the next week, the next month, even the next year. Good investing is not a get-rich-quick scheme.

We don't want to bounce in and then expecting to be bouncing out. Good investing is all about the long-term. Frequent invest or frequent trading eats up profit.

When you consider the process of trying to figure out when to get in the market when to get out of the market, you have to put your money someplace, you got trading commission's, you got some taxes to pay. You got all these things going on that often just chew up the potential profit that you would have had if you just stayed put.

I am talking about the idea or the habits of thinking you are going to hit home runs every time you do something.


2. Giving Your Money To Someone Else To Invest.

This is what the entire financial service industry including Warren Buffett's suggests that you do. It's a simple fact and this is really important, nobody cares as much about your financial future as you do. Nobody.

You are not doing yourself any favors by letting most financial who are willing to talk to you and take your money, you are not doing yourself any favor by letting them manage it. They are going to work on a subway, the problem is, the people who will take your money are not very good at it.

People who are good at it not willing to take your money, if you learned how to do your own research about businesses, companies, stocks, and the best way to use your own money to make more money. You can manage your own funds.

This is not rocket science that is out there doing for you, you can also make your own decisions about whether the company or the business you want to invest in has some values that you do. How important is that, to be putting your money into something you want to see in the future of the would. If you want to give your money? Give to somebody that you know is going to do something in the would you'd like to see done. That makes sense to me.

The problem with investment advisors is they just don't care about your money like you do. Well, they love to invest it because they get a percentage every year whether they do well or not. Most financial advisors, by the way, they don't beat the stock market, they don't even try to beat the stock market, they don't even believe you can beat the stock market.

But you have to pay them whether or not they beat it. Plus, paying a financial advisor eats indy returns on lots of levels. 

You have to educate yourself, you have to do the research, you can't just follow tips from some friends if you are going to do this on own. You have to take care of your money, your future and yourself, and that is going to take some work, I grant you that.


3. Panic Selling

This is really coming from a wrong understanding of investing. The consequences of panic selling are almost always a huge economic disaster. 

Lets me give you an example of what I mean.

In 2007 that is about 11 years ago, we are in a situation where the stocks starting to go down. People sit there and sit there and it goes down to 12,000, and then it goes down to 10,000, and now at about 10,000 people are starting to really freak out, it's starting to look like it's not going to turn around, goes down to 8,000, people are scared to death.

What do they do, they start to panic, now it's down to 8,000 they are freaking out and they start to sell-off. They should have sold it at 12,000 but look what happens, they sell it at 8,000 thinking that the market would go up.

This is almost inevitable when the panic hits, it's near the bottom when greed is insane and everybody's staying in and everybody knows it's going to go up and this is what happens when you are an amateur investor and you are ruled by emotion.

You are almost inevitably going to be panicking out of the investment at exactly the wrong time. And you are going to be jumping in at exactly the wrong time because you just don't know any better.

I  want you to realize that dealing with emotions is one of the critical things of becoming a great investor. You need to understand that you own wonderful businesses, if you sat in them for 10 years and forgot about the stock market, you are still going to do good.

You are probably making 25% to 30% a year if you bought great businesses in 2009 without doing anything to him, 2015, 2016, 2018, you could sit there right now and still be making 25% a year.

What is the bottom line? "Be Patient" If the fluctuations in the market drops, are causing you to panic, you really shouldn't own stocks in the first place. Panic selling indicates you truly don't understand how the company you own works. And if you own the S&P 500 baby, you don't understand any of it. You are just hoping this thing goes up.


4. Impatience

You can't produce a baby in one month by getting ten women pregnant. Waiting for an event and buying a company on sale is one of the best ways to alleviate risk and make money in the stock market. But it takes patience, you have to be able to wait, there are times when this wait can stretch into months and there are times like we're in now where the waiting can take years.

The tricks here is to make sure you have done your homework in the main time and that is the beauty of waiting, meanwhile you are doing a little research, a little bit each weeks and keep learning and putting up companies that you really like on a wish list, so you know when it's time to buy a company, you know how much it's worth and when you get to that number you know you are going to pull the trigger and get a good deal. That is all you have to do.



Hopefully, this article was helpful to you.

No comments:

Post a Comment