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The coronavirus-induced market bear wreaked havoc on 401ks, IRAs and other investments accounts worldwide in March. However, some sectors have drastically recovered from their March lows. This recovery has been quicker than most economists and financial pundits had anticipated. Both the S&P 500 (+8.58% YTD) and the tech-heavy Nasdaq Composite Index (+30.35% YTD) have posted multiple closing records. While some investors fled the markets in droves during the March volatility, others stood their ground outright and fought the bear<\/a>. Investors who realigned their portfolios\u00a0have seen solid stock market returns. Given the ongoing economic\u00a0uncertainty, we present a few investing tips to help you crush the markets now and well beyond the coronavirus pandemic.<\/p>\n [Recommended: Dear Mr. Coronavirus. Thank you for the emons. We’re making lemonade<\/a>.<\/strong>]<\/p>\n<\/div>\n 1. Don’t expect to get rich overnight.<\/strong><\/span><\/p>\n Investing<\/a> in the stock market is one of the best ways to amass massive wealth. But investing won’t\u00a0make you rich overnight. Unfortunately, many people\u00a0have unrealistic expectations about investing money. Such expectations can lead to disappointment, and cause you\u00a0to abandon investing altogether. You should invest consistently\u00a0and exercise patience to\u00a0help you\u00a0build sustainable\u00a0wealth.<\/p>\n<\/div>\n “Investing should be more like watching paint dry or watching grass grow. If you want excitement, take $800 and go to Las Vegas.”<\/p>\n Paul Samuelson, American\u00a0economist<\/cite>\n<\/p><\/blockquote>\n<\/div>\n 2.\u00a0 Don’t chase\u00a0yields.<\/span><\/strong><\/p>\n Whether you are a growth or a dividend investor, chasing\u00a0yields is an\u00a0investing mistake that can eat away your capital.\u00a0Oftentimes, an\u00a0investor\u00a0invests in a stock\u00a0or mutual fund solely based on past returns or high dividend yields. Sadly, this investing mistake can be a hindrance to your portfolio’s returns. Always keep in mind that past performance does not guarantee future results. If you’re struggling to choose\u00a0securities for your portfolio, check out\u00a0how to evaluate and select mutual funds<\/a>.\u00a0<\/p>\n<\/div>\n \t\t\t\t\t 3. Don’t cut your winners too soon and\u00a0your losers too late.<\/span><\/strong><\/p>\n Holding on to your winners long and cutting your losers\u00a0fast is a well-preached investment strategy. This strategy\u00a0can be risky. It should be\u00a0a balanced and\u00a0individualistic decision. How high you should let your winners jump\u00a0or how soon you should part ways with your\u00a0losers to preserve capital is a decision only you can make. Your winners of today may become your losers of tomorrow, and vice versa. An effective way to sell your losers quickly or preserve your gains is through\u00a0trailing stop loss orders<\/a>. <\/p>\n<\/div>\n 4. Don’t\u00a0try to time the markets.<\/span><\/strong><\/p>\n Don’t be a fool; don’t try to time the stock market. No one can. Trying to predict the right time\u00a0to enter or\u00a0exit the stock market\u00a0can lead to costly and\u00a0emotional investing decisions. It’s\u00a0a game you cannot win. There are too many\u00a0unpredictable forces or events that can bring wild swings to\u00a0the market at any given moment. Timing the markets won’t make you rich; time in the markets will. The\u00a0best thing you can do is to invest consistently. Investments that are held over the long-term almost always outperform short-term ones.\u00a0<\/p>\n<\/div>\n 5. Don’t listen to the naysayers\u00a0and “experts”.<\/span><\/strong><\/p>\n Investing is inherently volatile.\u00a0Obsession with short-term market movements and volatility<\/a> can be a portfolio killer. If you are a long-term investor, focus and discipline are your best friend. During the early weeks of the\u00a0stock market rally and recovery\u00a0following the coronavirus pandemic, many investors disinvested from the stock market and stayed on the sidelines. The idea was to protect whatever little profit, as\u00a0many investors\u00a0did not trust the rally. The so-called experts and pundits kept alluding to a nineties-style bubble. Those who heeded\u00a0the constant\u00a0doom and gloom preachings turned out to be some of the biggest losers!\u00a0If you have a strong investing objective and strategy, stick to your plan. Ignore the short-term noise, naysayers and experts. Remember: nobody knows what the stock market will do from one minute to the next–not you, not the experts.\u00a0<\/p>\n<\/div>\n “The individual investor should act consistently as an investor and not as a speculator.”<\/p>\n Ben Graham,\u00a0American investor<\/cite>\n<\/p><\/blockquote>\n<\/div>\n 6. Don’t\u00a0buy the “hot” new stock just because everybody else\u00a0is buying it.<\/span><\/strong><\/p>\n Jumping on the latest hot\u00a0stock\u00a0because everybody\u00a0else is buying it is one of the dumbest investing decisions you can make.\u00a0Sure,\u00a0the odds may\u00a0be stacked in your\u00a0favor and\u00a0you may win big. But if the only reason\u00a0you invest in a stock is for the\u00a0fear of\u00a0missing\u00a0out\u00a0on the current gains, you will set yourself up for investing failure when the stock implodes. You must always take a close look\u00a0at a company’s entire bottom line or fundamentals (e.g. debt, earnings, among other things) before investing in the stock. According to Warren Buffet, “Never invest in a business you cannot understand.”<\/p>\n [Recommended: Top stocks to buy right now<\/a>.]<\/strong><\/p>\n<\/div>\n 7.\u00a0 Don’t invest in funds with high expense ratios, unless…<\/span><\/strong><\/p>\n As an investor, your investing\u00a0goal\u00a0should be twofold: minimize cost and maximize returns. Investing in mutual funds<\/a>\u00a0with high expense ratios can\u00a0put a dent in your investment returns over time. Passively-managed mutual funds<\/a>\u00a0have\u00a0lower expense ratios<\/a>\u00a0than\u00a0active funds. There are times when\u00a0paying the extra fees for active management may make\u00a0sense. But\u00a0if your active funds continue to underperform their passively-managed counterparts, you may have to dump those funds.<\/p>\n [Related: This passively-managed growth index fund is a winner<\/a>.]<\/strong><\/p>\n<\/div>\n 8. Don’t fail to diversify your investments.<\/span><\/strong><\/p>\n Diversification is an investing strategy\u00a0of\u00a0allocating\u00a0money to\u00a0different asset classes<\/a> or sectors to minimize financial loss. For example, if you invest your money in only one asset class or sector and that sector suffers a financial downturn, your portfolio could pay a big financial price. Conversely, if you spread your money across different asset classes\u00a0and one sector falters, the other assets\u00a0in your portfolio may protect your investments from volatility and risk.<\/p>\n<\/div>\n 9. Don’t duplicate\u00a0your investments.<\/span><\/strong><\/p>\n Don’t confuse duplication with diversification. Portfolio duplication is\u00a0a mistake that young investors often make. It\u00a0is\u00a0the process of investing in equities from the same sector or asset class. For example, having two large-cap\u00a0mutual funds or exchange-traded funds with similar composition in your portfolio is duplication. Also, having multiple stocks from the same sector, say the technology sector<\/a>, can be a bad investing move.\u00a0Such a strategy\u00a0can\u00a0diminish your returns. To prevent portfolio duplication: 1) keep things simple; 2) know the category or asset classes that comprise your portfolio; 3) be mindful of\u00a0what you invest in.<\/p>\n<\/div>\n 10. Don’t hire a robo-advisor.<\/span><\/strong><\/p>\n Robo-advisors are digital platforms that use computer algorithms to automate investing. These\u00a0platforms enable\u00a0people to invest with\u00a0the use of a simple app. After entering a set of information during account setup, the\u00a0robo-advisor\u00a0will provide you with an investment portfolio. Oftentimes, that portfolio is composed of a few low-cost exchange-traded funds<\/a>. If you are new to investing, a robo-advisor\u00a0may make sense for you. But if you already have a handle on investing and want to avoid paying management fees, you shouldn’t hire a robo-advisor. You should consider\u00a0incorporting stocks in your portfolio to\u00a0maximize\u00a0your returns and outperform your roboadvisor.\u00a0<\/p>\n [Related: 4 reasons why you should fire your roboadvisor<\/a>.]<\/strong><\/p>\n<\/div>\n\n
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