7 Ways To Become A Better Investor Today

So, you want to be a better investor? Or perhaps, you want to know how to get better investment returns? There are two main parts to being a better investor:  Investment Returns and Investor Behavior. Of these two, you can only control one of the two—your behavior.

Here are a few investing fundamentals I’d like to share with you to help improve your investor behavior, which over the long run, should help you become a better investor. Some of these investing tips are so simple they are often overlooked and ignored.

1.) Your investments don’t need to be complicated.

 If you have 50 investment accounts all over the place, you are just making things harder on yourself. Look for an independent custodian, where you can easily hold all your investments in one place. You may still need several accounts, Roth IRA, Solo 401k, traditional IRA, JTWROS, and individual accounts, for example.

2.)  You don’t need to check your portfolio every day.

With technology, it is easy to check your investment portfolio multiple times per day. Unless you are actively trading on a regular basis, there is no reason to check your accounts this often. This is a waste of time and increases the odds of you freaking out on a volatile stock market day.

3.) Your portfolio should change when your life changes.

For many investors, big changes to your investment strategy should be made when your life situation has changed. For example, you invested for a house down payment. Once you purchase that home, any remaining money in the account can be repurposed, which will likely lead to a new investment allocation.

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4.) “It depends” and “I don’t know” are the answer to many financial questions. 

I often get asked, “Should I do (insert option A) or (insert financial option B?).” Most of the time, the answer will be, “It depends.” Every so often, the answer is a glaring YES or obvious NO.

While the stock market has traditionally trended upwards over time, no one really knows what the stock market will do today, or for that matter, exactly how it will perform in the next month. But what I do know as a fiduciary financial planner is how to help you build a plan that will guide you towards your various financial goals. That is probably a lot more relevant to you than how many points the stock market moved today.

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5.) The market goes up, the market goes down, and we will have recessions on a fairly regular basis. 

Every year winter comes, the temperature drops, and then things eventually warm up again. Just like the temperature, the market will fluctuate. If your investments move more than you can stomach, consider a more moderate portfolio. But don’t ditch the market altogether. For those who are still accumulating wealth, stock market volatility is your friend. Contribute to your retirement and investment account on a regular basis. Keep in mind; the stock market often rewards patience more than it will reward skill.

6.) Luck and Investing skill are not the same things. 

I’m going to assume you have heard the phrase, “Even a broken clock is right twice per day”? When the market has a great run like the past few years, it’s easy to think you are a rock star investor. Or perhaps, you have some inherent skill for picking great investments. Over the decades of helping people with their investing, I’ve found that the bigger the investor’s ego, the bigger the crash hits them when the market eventually does correct.

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7.) Investor behavior is HUGE. 

Getting amazing stock market returns over the long run is not about being skilled at picking the best investments. The biggest key to your success with investments is to behave well as an investor. You don’t have to be a math genius or have hot stock tips. Investing success is often about just the opposite of these things. Keep your investment strategies simple and easy to stick with. Resist the idiocy of the masses, and buy low, sell high. Put away some money every month or from every paycheck, and watch your account balances grow over time. Put it on autopilot and forget it.