Every New Year brings a new start & to get start, in the New Year I have decided to point out 12 investment mantras which will help you in getting a new perspective to your investments.
1. Do not invest without a sensible investment strategy
It is difficult to predict the direction, the markets will take in the coming years. We will see the markets that reflect the fast changing, world shaking events of this era. The markets are going to be unpredictable and full of surprises. We live in uncertain volatile times and the markets reflect these things.
2. Do not fall for get-rich-quick schemes.
A disciplined, long term strategy makes great sense in this unpredictable environment. Many opportunities will emerge in the coming years and these opportunities must be approached prudently by investors with long term objectives. (Read Speakasia – too good to be true)
3. Remain Humble Investor
Do not constantly judge your own success by that of others. Do not resent success of others when your own investments falter. Do not refuse to accept help or advice from others. Do not think that you alone know what the best investment is.
Being humble allows you to guard against thinking too highly of yourself. Humility reminds you not to bite off more than you can chew. It robs greed of its power over you, decreasing the odds that you will want more than what the market can provide you.
4. Beware of deceitful financial advisors
The best way to honor your financial advisor is by choosing one whose fee is based on a fixed percentage of the assets under management. Evaluate your advisor based on comparisons with a reasonable benchmark.
5. Do not be impatient with your investments
Do not press the panic button in a fluctuating market condition. Do not sacrifice long term growth for the quick hit. Your investment decisions must be based on common sense and what cold hard numbers tell you and not on media hype or industry buzz. If you have invested your money thoughtfully, then there is no need to worry.
Do not worship profits and take them just because you have them. It is wiser to hold on to your investment to meet your long term goals.
6. Avoid Speed Investing
For long term investors – slow is always better than fast. Entering and exiting the market with a short term objective is not good for your financial health. Regular and systematic investment for a long time is the best mode of investing.
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7. Stop Performance Chasing
Daily price movements seduce people to go for the most attractive investment. Do not buy something just because it is hot.
While it may be tempting to buy the best mutual fund, it makes better sense to stick with an investment plan that is well thought out to suit your investment goals. Chasing performance can prove to be dangerous in the long run.
8. Say No To Emotional Investing
An investor’s worst enemy is not the stock market but his own emotions. Do not let emotions drive your investment decision making. You need to be aware of your emotional temperature while making an investment decision. Calm investors have a far better track record than highly emotional ones. It is best to stay focused on your goals and be aware of risks at play while investing.
9. Show “The Door” to Ignorance
You must know your investments better than you know yourself. Do not act first and ask questions later. Thorough investigation is required before taking all investment decisions. It does not pay to live in ignorance.The only way to eliminate ignorance is by ensuring that you spend more time and effort towards being an informed investor.
10. Do Not Be Over-Optimistic
Avoid being too optimistic, too enthusiastic or too confident while making your investment decisions. Your investment decisions have to be logical and rational. Do not hold on to your investments long after they have lost their value, convinced that some day they will deliver a big return. Optimism is good but over-optimism is definitely a self-kill.
11. Do not sit on your savings
Remember that your money lying in savings account will not create wealth. Remove it from your bank account and put it at some place where it can grow. Accumulated money will not grow as fast as money that is spread across asset classes. Diversify your investments across asset classes to spread your risk. The sooner you start investing your savings the better it is for your financial health.
12. Accept a Loss /mistake
What would you do if you have taken a wrong route? Obviously you will return back, though it may have cost you time and money. But the same thing does not apply with most of the investors when they have chosen a wrong investment. Correct yourself, if you find that there is a mistake, don’t hang up with that investment.
This is a guest post by Anil Kumar Kapila. He is an avid follower of TFL; and wanted to share his financial tips for the benefit of other readers. The views expressed herein are the author’s personal views.