Buying stock is easy. In fact, trading overactivity triggered by emotions is one of the most common ways investors hurt their own portfolio returns. All the investing tips that follow can help investors cultivate the temperament required for long-term success. Spell out what you find attractive about the company and the opportunity you see for the future. What are your expectations? What would make me sell: Sometimes there are good reasons to split up.
For this part of your journal, compose an investing prenup that spells out what would drive you to sell the stock. The most successful investors buy businesses because they expect to be rewarded — via share price appreciation, dividends, etc. That means you can take your time in buying, too. Here are three buying strategies that reduce your exposure to price volatility:.
Dollar-cost averaging means investing a set amount of money at regular intervals, such as once per week or month. Checking in on your stocks once per quarter — such as when you receive quarterly reports — is plenty.
When one of your stocks experiences a sharp price movement find out what triggered the event. Is your stock the victim of collateral damage from the market responding to an unrelated event? Has something changed in the underlying business of the company? Is it something that meaningfully affects your long-term outlook? Rarely is short-term noise blaring headlines, temporary price fluctuations relevant to how a well-chosen company performs over the long term. Get investing insights with our monthly newsletter.
Dayana Yochim is a staff writer at NerdWallet, a personal finance website: See the Best Online Trading Platforms. See the Best Brokers for Beginners. We want to hear from you and encourage a lively discussion among our users. Please help us keep our site clean and safe by following our posting guidelines , and avoid disclosing personal or sensitive information such as bank account or phone numbers.
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