Don’t be in too much of a hurry or you might lose money

Years ago, when I bought one of my first stocks, its price dropped several days later. As a newbie investor I was scared so I unloaded these stocks in an attempt to minimize my losses. A few days later, they were back to the price I had bought them for. A day or two after that, they increased even more.

It’s easy to laugh at my rash decision and glaring mistake now. Fortunately, I didn’t lock in a particularly big loss at the time by hastily selling. But it taught me a very important lesson: not to let panic or other emotions get in the way of my investment decisions.

In fact, giving in to emotions is one of the main ways to lose money in the stock market. If you’ve ever been a victim of emotion-driven investing, here are some strategies to use.

When you think of investing in the stock market as a game for the long term, you will be less likely to be rattled by individual events along the way. The stock market has a long history of recovering from losses. If you take a buy and hold approach – load quality stocks now and hang on to them for decades – you’re less likely to burn yourself out. You are also less likely to panic whenever the value of your portfolio goes down.

Many people fear losing money on stocks and therefore hesitate to buy at certain times, such as when the value of stocks is rising or when there is a recession in play. This is why a better bet is to commit to buying stocks at regular intervals, regardless of the circumstances.

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It’s a strategy known as dollar cost averaging, and it helps investors avoid falling into the counterproductive burrow of trying to time the market. With the average cost in dollars, you could say that you will be putting $ 100 on the market every week. You could even be more specific and say that you will buy $ 100 of a particular stock. Average dollar cost has been shown to help investors pay a lower average share price than timed buys, and it’s a simple way to take emotions out of the equation. You can set up your brokerage account to follow a dollar cost averaging strategy, or sign up for your employer’s 401 (k) plan and have funds deducted from your paychecks on a regular basis.

Having a wide range of investments can give you peace of mind during times of volatile stock markets and reduce the likelihood that you will act irrationally. You can diversify by buying stocks from different segments of the market or by loading index funds. With index funds, your portfolio will not outperform the market as a whole, but you will benefit from the general market rally. Index funds also allow you to diversify in an instant, so you don’t have to take the time to research individual stocks or worry that you’ve picked the wrong ones.

Most of us can’t just flip a switch and turn our emotions off, but there are steps you can take to be a less emotional investor. This in turn could save you a world of loss in your lifetime.

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Years ago, when I bought one of my first stocks, its price dropped several days later. As a newbie investor I was scared so I unloaded these stocks in an attempt to minimize my losses. A few days later, they were back to the price I had bought them for. A day or two after that, they increased even more.

It’s easy to laugh at my rash decision and glaring mistake now. Fortunately, I didn’t lock in a particularly big loss at the time by hastily selling. But it taught me a very important lesson: not to let panic or other emotions get in the way of my investment decisions.

In fact, giving in to emotions is one of the main ways to lose money in the stock market. If you’ve ever been a victim of emotion-driven investing, here are some strategies to use.

When you think of investing in the stock market as a game for the long haul, you will be less likely to be thrown by individual events along the way. The stock market has a long history of recovering from losses. If you take a buy and hold approach – load quality stocks now and hang on to them for decades – you’re less likely to burn yourself out. You are also less likely to panic whenever the value of your portfolio goes down.