When It Comes to Investing in the Stock Market, Timing Is Everything ?!
The lesson here is simple: To make money in the market, remove the human element from the equation. Here's how.
Don't follow.
If you do what everyone else is doing, you're likely to get burned. That's how people went bust during the housing bubble, and it's how they lost big bucks during the market collapse in 2008.
When it comes to investing, consider the advice of Warren Buffett: "Be fearful when others are greedy, and be greedy when others are fearful."
Stick to your plan.
Socking money away regularly and automatically does pay off in the long run, even if the market goes through the dramatic swings we've seen over the last 5 years. Keep in mind that the crash in 2008 didn't wipe out those looking to retire; it simply delayed their retirement. When the market reaches new highs, people can stop working and have a chance at a richer lifestyle than they would've enjoyed had they cashed out five years ago.
Keep costs low.
To reduce costs (and to keep things simple), stick to low-cost mutual funds designed to track the broader movement of the stock market.
Ignore financial news.
A research has revealed that "Investors who received no news, performed better than those who received a constant stream of information - good or bad."
If you had done nothing with your portfolio after the crash in 2008 except make regular contributions to it, you'd be rewarded with a net worth that's well above where it was before the crash. Funny how doing nothing can make you look brilliant.
(Excerpts from the article published in The Entrepreneur)