When looking at the average investor, a research company found that the best performers were quite easily broken down into two groups:
– those that forgot they had an account
– and those that were dead.
So what can we learn from this? A few things actually.
Firstly, we should try to be hands off with our investments. Checking them every day leads to stress, anxiety and often times leaving the market early. Life is good when your investment is going up, but if it suddenly takes a dip?
Secondly, we should set up daily habits, and come up with a set-and-forget plan. Every pay cycle, X amount of dollars go to your investments. If you have a managed portfolio at a place like Milford Investing, this is as easy as depositing money into a bank account. If you’re doing it yourself, X dollars go into a bank account per a pay, and when it reaches a certain amount, you then work through your investing plan.
And then the trick is to leave it.
Just walk away.
Re-access how much you’re investing when you receive a pay increase. That should be the only time you remember it. To help keep your mind off the daily ups and downs for the first few years, sign up to dividend reinvestment programs. This way, when your money makes money, it goes into buying more of the shares you already have. It’s like money making money! After all, the first few years of dividends will be $100 here, $100 there. Not even worth the tax you would have had to pay had you chosen to get paid out.
This is advice I am having to follow myself. Patience is not something I am particularly good at when I know where I want to end up. But at the end of the day, the market rewards patience as shown by the study above. And daily habits is how we get there. If we can focus on the little bit we’re doing each day, it will pay dividends in the future. Ha – investing pun!
Being “in the middle” of the plan – that’s probably the hardest part. The dividends aren’t rolling in every day, the stocks aren’t going up-up-up. You’re still not a multi-millionaire like in the movies. It’s a very slow and steady burn, and our minds like to be occupied.
Just remember the study. Walk away. Forget about it for a year. With your set-and-forget plan working away in the background, you’ll be amazed at what can be accomplished by just ignoring it. Very odd life advice, but hey – sometimes it works!
You’re not alone in the middle. We’re all there with you. Our plans are just quietly working away in the background.
Trust the process, and sleep easy.
September 16th, 2020
Current Portfolio : $13,233.75
And now I must put this in for the legal reasons…
I am not a financial advisor. All advice is taken with this in mind. I do not benefit from you using the same platform I do, or by using a different one. I do not have any insider knowledge of any company listed. Everything I will talk about – from the tools to the news – will be as available to me as it is to you. Again: I am not a financial advisor and never will be.
