Most often in life, we wait until prices are discounted to stock up on key purchases. Yet investors often take the opposite tack – buying when markets are high and selling when asset values take a dip.
It’s a common approach, yet it can severely impact long term returns. Bailing out during market lows can mean cementing losses on assets that may go on to recover their value – and missing out on subsequent upswings.
The key to avoiding this wealth-wrecking cycle is to break some of your own bad habits. Try our three steps to form new habits to enrich your portfolio.
- Don’t focus on short term performance: If you find it hard to handle short term investment gyrations, make a point to check your investments quarterly or 6-monthly rather than daily.
- Ignore the hysteria: Investment markets don’t always chart a smooth course. The Black Monday market crash in the 1980s, the Tech Wreck of the noughties and the global financial meltdown of 2008 all demonstrate how unpredictable markets can be. Successful investors know this is a natural part of market behaviour, and if anything, market dips can be a good time to pick up quality investments at reduced prices.
- Rise above the crowd: Don’t let the herd drive your decisions. It can be hard, but holding true to your own course is the key to healthy long term returns. Stick to your long term strategy – don’t follow the market.
Part of the value of our ongoing advice is that we can help you avoid creating bad habits. You can call us to discuss your plans before putting them into action to make sure they are supporting – and not potentially sabotaging – your financial goals.
If you’d like to organise a review of your investment strategy, get in touch today.