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4 Tips for Finding Peace of Mind as an Investor

Posted By Miranda Marquit On 12/26/2012 @ 11:57 am In Investing | 1 Comment

We live in times where it can be difficult to be an investor. It’s hard to know what will happen next, no matter who you are, or where your money is invested. Every day, it seems as though there’s a big move one way or the other, and it always seem as though everything is on the verge of a meltdown.

If you want to find some measure of peace of mind as an investor, here are 4 things you can try:

1. Create a Plan

One of the best things you can do for your peace of mind is to create an investing plan [3]. We all feel better when we know what’s coming, and when there’s a plan for moving forward. Your investing plan can help you figure out a strategy for investing, and stay on track. When you know what the plan is, you are more likely to find peace of mind.

2. Don’t Compare Yourself to Others

It’s hard to block out the loud noises and images of sensationalist media. Whether it’s trying to encourage you to jump on a “hot” stock, or whether it’s all panic and selling, don’t compare what you’re doing to what everyone else seems to be doing.

And this doesn’t just apply to what you see in the financial media. Don’t get roped into competing with a co-worker over who’s portfolio is the best, and don’t wish that you could make as much as your cousin, who risks a lot on risky investments. Instead, look at your own investing plan, and fundamentals of your portfolio. Only compare yourself to yourself, and look for improvement.

3. Remember Trend Lines Smooth Out Over Time

Market trend lines, viewed up close, are scary looking. Short-term, the market is extremely volatile. This can be terrifying to many investors. However, if you consider that trend lines smooth out over time, you can find a little peace in the midst of volatile times. When you look at a chart that covers 30 years, the drops don’t seem as precipitous as when you look at those on a chart that only covers 5 years. Keep that in mind, and you’ll feel calmer about the whole thing.

4. Focus on the Fundamentals

When everything seems to be spiraling out of control, it’s easy to get caught up in what is happening with the price right now. However, it’s important to look at the fundamentals underlying an investment. Have they changed? There are times when it makes sense to sell an investment. However, the time that you’re scared because the whole market is dropping is not the time.

Make sure that you take a measured approach to your investment decisions. Go back and review your investing plan. Take a look at some long-term trends. Then evaluate your investment based on the fundamentals. If your investment still has solid fundamentals, there is a good chance that it will still be a good investment for the long haul. Only change things up if the fundamentals have changed.

While there’s no way to guarantee success, no matter how careful you are, and how smart you are, you can increase your chances of long-term investment gains if you seek peace of mind, and try to limit your emotional response.

(Photo: joelogon [4])

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