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3 Tricks To Be A Better Investor

Have you been investing for a long time and find that you have not been improving lately? I have many of such moments in my decade-long investment career. Very often, I will investigate how other great investors are investing and find tricks where I can pick up to make better myself.

Here are three simple tricks that I have picked up over the last decade that have helped me tremendously.

Don’t Check Your Portfolio Every Day

We are supposed to be investing for the long-term. This means that for every investment that we make, we should be comfortable in holding them for the next five to 10 years.

If we are investing in companies for the next ten years, then there is very little reason why we should be checking on their stock prices every day. I found out that if we can resist the urge of checking our portfolio every day, we might perform better. This is because we are not easily affected by the daily swings in the stock prices which could force us to make wrong investment decisions.

Slow Down Your Investment Decisions

When we come across a stock that is interesting, our first reaction would be excitement. We might end up being very eager to invest in the stock even before any serious research is done. This means that we could end up investing based on our emotion rather than logic.

I found that it might be good practice to slow down that investment decision process. After all, a good investment should continue to be the good investment in the future. This means that if we slow down our investment decision, we would still be able to enjoy the long-term growth of the company once we are very confident in investing in it.

Moreover, if a company is not worth investing in, we would be able to avoid it as we would have spent more time analysing it and finding out about all its flaws.

Don’t Over-Analyse

Previously, I used to spend a huge amount of time just to analyse one company. I would dig out everything there is to know about a company.

However, after years of researching like a forensic investigator, I realised that much of my investment decision could be made by just about 20% of the information. This means that I would have made the same decision if I had known just 20% of the information I had known previously.

The Pareto principle, or the 80/20 rule, states that roughly 80% of the effects come from 20% of the causes. I realised that we should spend time researching a company, but we should never over analyse it.

Foolish Summary

If you are looking for a quick way to improve your investment skills, here are three simple tricks that took me years before I realised their importance. Hope they are useful to you too.

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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 Stanley Lim doesn’t own shares in any companies mentioned.