Like with any other venture, there are things that would be beyond your control when you invest. But the good news is, investing may still be the most financially rewarding thing you can do, given, of course, that you know what it takes for you to have a good experience.
So, what can you do to achieve a better investment experience? Calamita Wealth Management, your fee-only financial planner from Charlotte, North Carolina, offers some helpful tips for you:
Fully Embrace Market Pricing and Stop Outguessing the Market
You have to accept that the market is truly effective in processing information. With every trade made, buyers and sellers alike bring new data to the market, which helps dictate prices. The thing is, no one knows what information they’ll get next, but even with that uncertainty, what you can be sure of is that the prices will adapt and adjust to it. Even if the market doesn’t price assets perfectly at all times, it’s still an excellent strategy to accept what the market is telling you.
Don’t make the mistake of trying to outguess the market and think that you can identify securities that are “mispriced,” then use that to get higher returns. The large proportion of mutual funds that did not reach their benchmarks proves that fair market pricing goes against that idea. Quick research will tell you that mutual funds that try to outguess the market often don’t consistently keep pace with the overall market.
Don’t Try to Chase Past Performance
Another mistake that you should avoid is choosing mutual funds based on how they performed in the past, when the fact of the matter is, their performance history doesn’t offer much insight into its future. For instance, it’s unlikely that funds that performed in the top quartile say in the past five years or so, will remain in the same position in the ranking in the following five years, too.
If you want to minimize risks, you should consider holding securities across different market segments. It’s okay to start by diversifying within your home market, but once you feel comfortable about it, you should consider diversifying globally.
Take Your Emotions Out of the Equation
It might be challenging, but you should try hard to separate your emotions from your investment decisions. As much as possible, don’t take it personally when the market movements affect your securities negatively. Markets do get up and down, and by becoming too emotional about it, you could end up making poor decisions instead of good and logical ones.
Focus on What You Have Control Over
Any financial advisor worth their salt will tell you that you need to focus only on what you can control instead of over analyzing the things you can’t do anything about. Ultimately, this is what can lead to a much-improved investment experience. You can create an investment plan that suits your needs and your risk tolerance. You can also work on managing your expenses and taxes, and last but certainly not least, you need to stay focused and disciplined no matter what dips and swings may happen with the market.
As you can see, there are ways to achieve a better investment experience. By following these tips from a fee-only financial planner, you can make the most of your investment journey and maybe even have fun doing it.
Calamita Wealth Management is where you can find a reliable financial planner in Charlotte, NC. We can provide you with fee-only financial planning, retirement planning, and more. Contact us to find out more!