Top 5 Investing Resolutions for the New Year

A new year is just around the corner. Going with tradition, some Foolish readers may take up new resolutions for 2015. So, why not make some investing resolutions as well?

To help you, I passed my Foolish hat around to my fellow Fools to collect their best suggestions and came up with a list of the top five New Year investing-resolutions. Here they are.

1. Stay the course

Good investing can be made simple and uncomplicated. You do not need complicated investment theories in order to beat the SDPR STI ETF (SGX: ES3) – a proxy to Singapre’s market barometer, the Straits Times Index (SGX: ^STI). For instance, Foolish readers can choose to build a simple “income portfolio” without too much fuss.

The key here is having the persistence and tenacity to keep investing over your lifetime. It would be a real shame if you ever gave up on investing towards your goals.

2. Double your holding period

The single best thing that you can do to improve your investing returns might be to double the holding period for your shares. You may have heard that the best returns can be found over long investing periods, but let’s hear it again from investing maestro Peter Lynch:

“People want instant gratification, but that’s a guaranteed way to lose money in stock investing. From one year to the next, the stock market is a coin flip: it can go up or down. The real money in stocks is made in the third, fourth and fifth year of your investment, because you are participating in the company’s earnings, which grow over time.”

As the head of the US-based Fidelity Magellan fund in 1977, Lynch racked up compounded annual growth rates of 29% for the fund over a period of 13 years. Every $1,000 invested in Lynch’s fund during his tenure would have turned into $27,200 by the time he retired 13 years later. Now, that’s one investor worth listening to.

3. Look for great companies

It is my own belief that we should always concentrate on finding the best companies of our generation. This should happen regardless of what the share market does. Here’s a few scenarios:

Oil prices plunge? Buy the best oil and gas companies. Oil price spikes? Look for the best oil and gas companies that can take advantage of a rebound. Share market plunges? Look for the best companies to own at fantastic prices. Share market rises? Keep looking for the best companies to own for the long term.

Bottom line, I believe that our financial future can be best served by holding on to the shares which can deliver stupendous returns over the long term. And how might that be done? By finding the best companies!

4. Don’t be swayed by the financial news

If we can put our finger on one sure thing, it would be that the financial media will continue to bombard us on a daily basis. The problem is that a lot of the financial news is going to be of little practical use, and at other times, distract us from studying businesses. Foolish investors can help themselves by separating the signal from the noise and not be swayed by the torrent of daily (often useless) information.

5. Spread the good gospel of investing to family and friends

If you find investing to be fun, well, consider sharing the fun with your friends and family who may benefit from it too. Remember: The benefits of investing can go beyond just the monetary returns alone. There can be camaraderie built through discussing shares as living breathing companies, all in the spirit of learning together.

That’s all for now. See you on the other side of the year. Fool on!

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Chin Hui Leong doesn’t own shares in any companies mentioned.