Investing for Beginners: Breaking Bad Habits

One of the most important lessons that you will need to learn in investing 101 is how to break bad habits. By breaking bad habits, you are going to be able to become a much more successful investor overall. Here are a few things to consider about breaking bad habits and what types of habits you might want to get away from.

Power of Habits

Habits can be extremely powerful for everyone. Habits guide the majority of what we do in our daily lives. Most of the time, you do not even think about every single decision that you make. Instead, your actions are guided by the habits that you form. If you are going to be successful as an investor, you need to form the proper habits and start thinking critically about every decision that you make. 

Following the Experts

One of the worst habits that you can form is following what the experts say. Many new investors get in the habit of basing their investment decisions on what an investment expert has to say about a topic. For example, an expert might say that everyone should liquidate their shares of a particular company. Based on that recommendation, you sell your shares of the company. As soon as you sell, the price of the stock increases and you miss out on profits. Instead of blindly following the experts, you should form your own opinions about an investment. You want to be able to do your own research and find out everything that you can about an investment before you buy or sell. 

Not Investing Regularly

Many investors get in the habit of investing randomly. They get a little bit of extra money from their paycheck and they decide to randomly invest it. Instead of taking this approach, you need to get in the habit of investing regularly. You need to decide on a certain amount of money that you are going to invest every month. By doing this, you are going to form the habit of investing and it will help you build your portfolio quickly.

Moving Around

Another bad habit that many investors form is they move from one trading strategy to the next without giving the first one time to work. You should not move around until you have assessed whether a particular method of trading works for you. There are many different types of investments and strategies that you can use to trade them. Many of them can be effective but a lot of investors do not give these strategies a chance to work before they move to something else. Try to be as patient as possible when you are trying out a new trading strategy. One of the biggest problems with new investors is that they are constantly looking for the "Holy Grail" of investing. In reality, there is no perfect method of trading or perfect investment. You have to be willing to take the good with the bad.

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