Invest Don’t Trade
Another rule in the path to investing success is to invest your money, don’t trade it. Investing means buying the stock of a company that you believe will offer long term financial rewards. Trading, means buying a stock that you believe will go up or down, regardless of the underlying company and its fundamentals. When it comes to your hard earned assets, you don’t want to risk your capital making trades based on technical data or on your short term beliefs. That’s because in the short term, anything can happen, but over the long term stocks generally rise and outperform all other asset classes.
Here are some tips on how to think like an investor and not like a trader:
- Think long-term.
- Build convictions in your investments.
- Don’t try to time the market.
- Add to your portfolio consistently over time and hold your investments as long as they are fundamentally sound.
- Although it is tempting to try to time the market, it is impossible to do. Trust us. There are almost no professional money managers that can time the market. If they did, it was because of luck and it likely won’t happen again.
- If you want to beat the market, stay invested during good and bad times and hold your convictions.
- When stocks are down and everyone wants to sell, you should continue to invest. These times often offer the best buying opportunities.
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