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Ways to Keep Yourself Disciplined as an Investor

Part of the Reading the Financial Pages For Dummies Cheat Sheet (UK Edition)

When investing, you need to maintain some order in what you do. Reading the financial pages helps you get the info you need, and helps you learn what you need to do to keep disciplined. Key things to do are:

  • Maintain a stop-loss regime, whereby you decide to sell a share automatically if it falls by a certain amount. And stick to your policy through thick and thin. Tough, but it means your fragile pride doesn’t get hurt because it’s the stop-loss that’s ‘doing the selling’, not you.

  • Run a dummy portfolio for a while before investing real cash in a share, and spend time watching and learning about how it behaves.

  • Keep your portfolio allocation under constant review, and make sure it fits your risk profile. Too much property, too many high-risk shares, too little cash?

  • Consider top-slicing after making a particularly big profit. Sell some of your holding, so as to stop your portfolio becoming over-dependent on one share.

  • Don’t over-trade: Buying in and out of a share to earn a few percent is expensive in terms of fees, and is rarely worthwhile in the long run. If you like the share, stay invested.

  • Never fall in love with a share: It won’t love you back.

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