Developing Good Investment Habits!
Good investing habits are needed to ensure that you follow through on your investment plan. Some tips to hone your investing habits follow:
- Write everything down in a diary. Every time you make a trade, write down why you did so and what was going on in the market to precipitate that trade. This will force you to organize your thoughts before making a trade. The diary will also be useful when evaluating your investment strategies.
- Keep track of your portfolio’s performance. Don’t get overzealous and review your portfolio’s performance daily or even weekly. Monthly, quarterly, or even annual reviews are adequate. The point is to assess how your investments have performed compared to a relevant benchmark. Evaluate all your investments, not just your retirement accounts or your taxable accounts.
- Monitor the market and your investments. You can’t just purchase investments and then forget about them. While you don’t have to read everything in print about your investments, make sure to set aside enough time to review quarterly and annual reports and other major news about your investments. You’ll also want to read enough to have a general sense of what is going on in the market.
- Evaluate your strategies. Once a year, thoroughly review your investment strategies to make sure they are helping you achieve your financial goals. The other habits will assist in this review. Pull out your diary and the analysis of your portfolio’s performance so you can review all your trades and investments in detail. You’re looking for trends and trying to analyze what you did right and wrong during the year. If you’d like help with this overall analysis, contact your financial adviser.