Don’t compare yourself to others

In order to be a successful investor, you shouldn’t compare yourself to others.

It is difficult being an investor. Sometimes the price of your stocks rise for no apparent reason and sometimes they fall seemingly without any cause.

Then it is easy to either buy or sell just to make a few more dollars short-term, but that is a not how you should think about the problem.

The correct way is to make as few investment decisions as possible. Warren Buffet has famously said that “you would be better off if you limited yourself to, let’s say, 20 investment decisions in your lifetime”.

If the trading was limited, you would have to justify to yourself why and at what price you want to execute this particular trade.

Hopefully you would then skip a few of the bad deals that you are bound to do in affect.

That inevitably means that you will miss out on some opportunities.

But that is not a bad thing – it’s a good thing.

When you are seeing a stock rise, and you’ve carefully looked at the financials of that particular stock, it’s very satisfying finally being proven right.

The downsides of trading

Now you may be thinking “That sounds all very good, but I don’t want to keep my stock if it goes to zero.”

Again, that is not the way you want to think about your investments.

If the value of your stocks are falling it means that they have become cheaper and you can buy more.

Depending on the quality of your investment decisions, the dividend that you are receiving should be safe if you’ve bought good stocks.

That means that you will not miss out on the compound interest that you will earn by simply keeping your stock.

If you in any way are concerned about the compound interest please keep your stock.

Conclusion:

In today’s post we have been looking at the many pitfalls when it comes to comparing your portfolio to others.

 

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