Avoid Becoming a Short-Term Trader
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Stay focused on long-term goals
When the market is in free fall, it can be tempting to try to predict what will happen next. However, it’s essential to remember why you invested in the first place and keep those goals in mind. Many people invest for long-term goals like retirement, which might still be decades away. -
Don’t chase recent winners
Selling what has gone down to buy what has already gone up is unlikely to be a winning strategy over time. Sticking with your chosen portfolio allocations and rebalancing toward those allocations as prices change is the way to go.
Don’t Panic and Sell Everything
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Investors can miss the recovery
Investors who think they can get out of the market until things settle down or until there’s less uncertainty are likely to miss the recovery when it comes. -
Selling can be especially harmful
If stocks continue to fall after you sell, you may feel great about your decision, but it can feel so good that you may never get back in.
Other Investment Mistakes to Watch Out For
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Don’t check your portfolio constantly
Constantly worrying about your fluctuating portfolio is likely to lead to emotional decisions. Dollar-cost averaging in a workplace retirement plan is a good way to participate. -
Cash is no place to hide
With inflation still elevated, cash is losing purchasing power. Holding a small amount of cash in your portfolio can help you take advantage of market declines.
Bottom Line
Market sell-offs are unnerving, but you can avoid making mistakes by slowing down and thinking through your long-term investment plan.
Important Considerations
- Editorial Disclaimer
- All investors are advised to conduct their own independent research into investment strategies before making an investment decision.
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