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Three Simple Rules to Improve Your Investment ResultsBy
Wednesday, October 5, 2016
A lot can go wrong when you're deciding how to invest your money.
A range of investment pitfalls can destroy your wealth.
Today, I'll discuss three of the most common mistakes investors make – and I'll explain how to minimize the damage they can cause to your portfolio...
Once you've entered a buy order, it is common to be flooded with a range of emotions – excitement, pleasure, anxiety... or deep regret. "Did I just buy the right stock?" "Am I the sucker who just bought at the top of a market bubble?" "What if this company is a total lemon?" All this worrying – or "buyer's remorse" – can be damaging and could lead to an impulsive, emotional decision to prematurely sell a stock. Just as you would do when you buy anything from a refrigerator to a new car, do your research. Understand what you're buying and create an exit strategy (like a stop loss).
People tend to follow the herd. It's human nature to think that the majority is doing the right thing. This crowd mentality is one of the reasons market bubbles form. When everyone is bullish on a stock, prices skyrocket. Of course, it works the other way, too. But just like Mom and Dad always said, just because everyone else is doing it doesn't mean it's the right thing to do. Do research and form your own opinions.
One of the most expensive phrases in the English language is, "My financial adviser is taking care of my money." Your adviser isn't your friend. You're just a bag full of money, and he's trying to get as much out of that bag as possible. That doesn't mean you should ignore your adviser. He isn't out to get you. But he does want to generate fees for his company.
At the end of the day, you're the only person who has your best interest in mind. Ask questions. Read the fine print. Ask your broker or adviser to lower his fees. Make sure you understand what you're buying.
Of course, there's no way to guarantee that every investment decision you make will turn out as you had planned. But taking these steps will help you grow your portfolio over the long run.
Regards,
Kim Iskyan
Editor's note: The Truewealth Asian Investment Daily team recently published a free report showing readers how to avoid some of the most common pitfalls in investing. You can gain free access to this report right here. And if you'd like to sign up for their free daily e-letter, click here.
Further Reading:
"When you hear cocktail-party chatter filled with stories of stock victories, that's a classic sign of the end of a bull market and the start of a bear market," Doc Eifrig writes. "It works the same way with fear, too." See why he says fear will ruin your financial future here.
Market NotesTHIS BANKING GIANT HITS A ROUGH PATCH Lots of folks don't trust big banks... and recently, we saw why...
Wells Fargo (WFC) is one of the biggest banks in the world. Its 8,600 locations serve more than 70 million customers around the world, including one in every three U.S. households.
But the business has hit a rough patch of late. Earlier this month, regulators fined the bank $185 million for "widespread illegal" sales practices. Wells Fargo employees opened as many as 2 million deposit and credit-card accounts without customers' knowledge. According to reports, these practices had been going on since 2011.
Amidst all of this negative news, WFC shares collapsed to a new 52-week low. They're down nearly 20% on the year. Until the damage from these reports is contained – and Americans start to regain their trust – shares aren't likely to recover anytime soon...
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