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3 Tips to Make You a Better Investor

There are many great investment websites and books out there that can teach you how to become a better investor. However, all that reading will do you no good if you do not put them into practice, or if you let your emotions take control.

Investing is often more of a control of your emotions than it is about your intelligence. In fact, Warren Buffett has admonished that “Investing is not a game where the guy with the 160 IQ beats the guy with 130 IQ’’. Mutual fund legend Peter Lynch also wrote about the importance of emotional control in his book Beating The Street, ‘’Everyone has the brainpower to make money in stocks. Not everyone has the stomach.’’

These 3 short tips can help you to better control your emotions:

1)      In normal market conditions, do your own calculations to find out at what share prices would be considered a great bargain. Keep a bargain list and during market turmoil, use it! Doing so can help minimise the effects of paralysing fear when share prices everywhere are dropping faster than swatted flies.

2)      Write down why you bought shares in a company and what would make you sell (nope, ‘a falling share price’ does not count as a valid reason). When the share prices of your investments fall, panic and fear might cause you to sell your shares even though there is no change in the fundamentals of the company. Writing down the reasons for selling before you make your investment can let you check whether there is a valid, logical reason to sell your shares.

3)      Tune out all that noise. You already know how susceptible you might be to following the herd, but good investing results are made by being contrarian. Listening and following market chatter all day long will only heighten that sense of uncertainty and fear that might lead to rash investing decisions.

Find some good websites or sources and stick to them (er-hem, other than fool.sg of course).  Over time, you will be able to judge for yourself how the advice is working out for you.

And please remember – it’s the stomach, not the brain!

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice.