Having trouble coming up with some resolutions for the new year? Here are five investing resolutions to get you started.
Invest in companies that create a better future.
We all want to make money when investing but it is possible to also have a positive impact on the world while we do it. There are mutual funds and ETF's that have their own set of standards when creating socially conscious portfolios but there is no right answer here. Maybe you want to invest in clean energy. Maybe you want to invest in companies that promote healthier lifestyles. There is no right answer here. The Vanguard ESG U.S. Stock ETF (Symbol: ESGV) is a good place to start to get some ideas.
Consider the bear case.
When we make an investment we are always trying to confirm that it was a good investment. This is something called confirmation bias. I'm encouraging you to do the opposite. Seek opinions of others that are different than yours. Open your ears to why your investment might not be a good one. By doing this you'll understand your investment even more.
To go one step further, when everyone is touting why a certain investment is a homerun - be the contrarian. It's tough to be the villain but maybe you'll learn all the good news is priced in and there isn't much upside left.
Do the hard work.
It's time consuming but if you aren't going to do the work you might as well just buy an index fund. There are millions of investors out there trying to take your money and if you don't want to do the hard work yourself, pay someone else.
The internet is full of tools to help you out but sometimes the easiest way to value an investment is to just read the financial statements and listen to the conference calls. Simple yet effective.
Learn something new.
Sure everyone knows stocks but bonds are actually back in vogue. If you're unfamiliar with bonds there is no better time than the present to learn about them, especially since they are offering better yields. If you're not retired yet your need for bonds should be fairly mild. This doesn't mean you shouldn't know how they work or not invest in them entirely.
Don't let me pin you down to bonds. International investing, investing in microcaps, investing in real estate, or investing in private companies may be of more interest to you. Dive in. I'm sure there is a Masterclass out there to help you out.
Control your emotions.
Emotions can be your biggest enemy in investing. This is a reason why many investors buy high and sell low. FOMO (fear of missing out) is an emotion many investors experienced during the COVID market boom and then bailed on stocks as prices crashed.
The best way to eliminate emotions is to have a plan before making an investment. Write down the reasons you are getting into an investment and the reasons you would get out. Then you can refer to this document when you are really feeling your feelings.