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3 Ways to Stop Sabotaging Yourself in Investing

While investing can be a very interesting and thought-provoking process, investors may also occasionally — inadvertently — sabotage themselves without realising it. Self-reflection does not always yield useful insights as we tend to be less objective with ourselves compared to other people. Other hindrances to recognizing problems within ourselves are ego and pride — no one likes to admit they have been doing something wrong.

Here are three ways investors end up sabotaging themselves and negatively affecting their own portfolio’s performance.

1. Stop listening to rumours

Investors may not realise this, but listening and reacting to rumours is a sure-fire way to cripple your portfolio and send it spiraling down the drain. Rumours often swirl around speculative companies with no discernible moat or positive traits, ones that are subject to manipulation and erratic price movements by large syndicates. More often than not, trading a stock based on a “hot tip” or rumour will get an investor badly burnt.

2. Stop behaving emotionally

By acting out of greed and fear, investors are letting their emotions control their actions. Instead, they should be calmly assessing events and situations in order to decide on the best course of action in an objective and rational manner. Obviously, this is easier said than done, especially when money is involved. But it is absolutely imperative for investors to stop behaving emotionally where investing is concerned, as it can have a long-term detrimental impact on their wealth-building goals.

3. Stop watching share prices like a hawk

There is some perverse human tendency to track share prices on an almost minute-by-minute basis, if only because we are able to with the help of technology and smartphones. While it might be visually stimulating to watch prices move up and down, investors should understand that companies can only grow if they are given time to execute their plans and strategies.

In other words, short-term price movements do not matter since many of them are random. Investing should be about keeping an eye on the financials and business environment surrounding the company, rather than at what price a company’s shares are trading hands on a daily basis.

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