Learning from Your Financial Mistakes

f57d0830-9593-11e3-983a-e50f5cf69079_175531215When it comes to investing and most matters involving money, it seems the majority of people are influenced by fear.  You might sell a stock out of fear that you are going to lose a bunch of money, or you might see a downturn in the stock market and decide not to invest at all.  You should never invest money if you are afraid to lose it.  I have experienced situations where I did not buy a stock and then it  dropped significantly to which I was happy with my decision.

It is impossible to predict the stock market which is why it becomes even more important to understand your mistakes and learn from them.  Reduce the risk of your investments by doing the necessary research beforehand instead of making impulse buys or going along with the crowd.  You can always make decisions about stocks without actually buying any.  Then go back to see how your strategies would have fared.  Google Finance allows you to build a custom portfolio and simulate transactions.  This gives you the opportunity to test your strategies in the market before you are ready to invest.  Hopefully if you pay attention to your failures, they will begin to breed success.

One thing that I’ve heard that has always stood out to me is that you do not have to pick all winners to succeed.  You only need the sum of your winners to outperform your losers.  Even if you pick ten stocks and have nine losers, you can still have one winner that does better than all of the others.  Think of it in those terms.

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