While these mistakes may seem like common sense, avoiding them isn’t always common practice.
Active trading doesn’t work. It’s not free those costs add up and are a drag on your portfolio, as well as your tax burden (short term gains are taxed as ordinary income).
Nobody can forecast the market consistently. Even the most well-informed professionals can’t predict consistently all the time. Just be patient. Good things come to those who wait.
A bear market is when the stock market drops more than 20%. They typically last about 17–18 months. The one thing they all have in common: they are followed by a bull market that is stronger and has surpassed the old highs. If you carry through a bear market (even buying into it), then you will be more profitable.
The financial news is the enemy of the long-term investor. It is typically fear-mongering and causes you to make the previous 3 mistakes. If you normally consume the financial news, try going on a 7 day financial news ‘diet’. Then try for 2 weeks, then just stop altogether.
Stop trying to ‘keep up with the Jones’’. The strategy that is right for them may not be the same for you. Make sure you customize your plans with what is aligned with you. Work with your advisor to see if something makes sense, don’t just follow someone else blindly.
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