While investing can be complex the most important habits are simple to follow and will make it easy to achieve your longer-term financial goals.
1. Focus on what you can control not what you can’t. Virtually no one can predict with consistency where the financial markets are heading so don’t waste your time trying. Instead, get clear on your goals, develop a plan and stick with it. Are you saving for your first home or planning for an early retirement? Work out what money you’ll need, by when and develop a plan to get you there. Spend less than you earn and create a safety net for the unexpected (ideally 3 to 6 months of expenditure), so you have money to fall back on should you need it.
2. Think longer-term. As tempting as it may be, don’t focus on the day to day fluctuations of the stock market. Over the last 200 years, despite ups and downs, the stock market has been the best place for the longer-term investor to build their wealth.
3. Do NOT trust your instincts. While this goes against much of what you’re taught – emotions are enemy number one. Rationally we may want to buy low and sell high, but our emotions may lead us to sell when markets tumble and buy when they rise. When fear and greed kick in we can end up doing exactly the wrong thing at the wrong time.
4. Don’t let your cash stash get too big. Carrying cash for emergencies and shorter-term needs makes sense. However, cash can be a poor investment over the longer-term as inflation erodes away its purchasing power, particularly in low-interest rate environments.
5. Keep an eye on your fees. Whatever investment product you chose, shop around for low fees. Remember: the higher the fees the higher your investment returns need to be to cover them.
6. Save. Savings are freedom and security. Whether it’s for a new car, a holiday, a new house, your retirement or an emergency – having money saved (and invested) gives you more financial freedom.
7. Don’t put off till tomorrow what you can do today. Whatever you’re planning towards, start now. You’ll feel better and crucially will benefit from compound returns. Invest £1,000 aged 35 at 9.46%* and you’d have £6,097 when you’re 55. Start ten years earlier and you’d have £15,054 – almost twice as much. However, these levels of return are not guaranteed as past performance is not a guarantee of future performance and as all investing, you could get back less than you originally invested.
The bottom line: develop these simple traits today and you’ll be on track to confidently build your financial future.
Source:www.moneyboxapp.com
