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4 Signs Your Investment Strategy is Not Working

When it comes to investing, people usually think that everything is uncertain and risky. Although this theory is not so far away from the truth, the times when investing was reserved only for wealthy business owners who had some extra money to spend on their investment hobbies has most certainly passed. Today, people are more aware of the fact that investing and passive income are almost equally important as having a regular job (if not more important than just working a 9 to 5 job). That being said, people indulge in this kind of activity more often, and they are open to learning as much as they can about the process.

Luckily for everyone, there are thousands of resources available, when it comes to investment rules, tips and tricks, dos and don’ts, which was not the case 5, 10 or 20 years ago. With all the useful podcasts, YouTube videos, books and other materials, people have the unparalleled opportunity to absorb the knowledge they need before they invest the first amount of their money.

On the other hand, thanks to the popularity of cryptocurrencies, numerous celebrities emphasized the amazing potential investing has, when it comes to making serious profits. There are even hundreds of websites that mimic what the most famous investors do, copying their daily investment choices.

As a result, all of this contributes to the fact that this industry is stronger than ever and is constantly growing, reaching its peaks year after year. It also explains why people are willing to risk more in order to get more, since they have so many useful tools available, along with other people’s experiences that they can use in their favor.

However, having good resources available doesn’t necessarily have to mean that investors, whether they are newbies or highly skilled, don’t make mistakes. Considering the fact that every investment possibly may not return to the investor, there are several factors that need to be included when making an investment, since this is the only way to control your income and your losses. Being aware of every step of the process is essential for being able to detect any problems or signs that you are doing something wrong. Other than that, choosing the right strategy is the only way to get the results you want. However, this is not an easy thing to do, especially if you are new in this field.

Losses are normal in every business, including investing too, but in most of the cases, you are able to notice some signs that something bad might happen, whether if it’s a change on the market or an event that occurred thanks to your personal choices and decisions you’ve made along the way. This is why choosing the right strategy is equally important as knowing when to change it, for more information, click here. If it doesn’t work, it doesn’t mean you should stick with it forever. It doesn’t mean that you should give up on it too soon either. Sounds complicated? In reality, there are a couple of major indicators you should slow down and make some changes. Let’s dig into that.

1. If it’s negative then it’s (probably) entirely negative

Source: money.usnews.com

Financial losses are a normal part of every investing process, but it doesn’t mean you should continuously spend money, with no returns. That being said, you have to know how and when to determine that enough is enough.

Paying close attention to your cash flow, both positive and negative, and keeping track of it on a daily, monthly and yearly basis is maybe boring, but it certainly is necessary. Maybe you haven’t planned to work with Excel and Google sheets, but you better prepare for it. Not only that, get informed about the company you’re about to invest in, and make sure it’s got potential.

2. If it’s getting personal then it’s becoming a problem

Source: dfi.wa.gov

The number one rule for every investor’s success is to create a diverse portfolio. Clearly, it doesn’t mean you should hold too many different stocks or assets, but as long as you can keep track of the changes of your assets, it means you can handle it. Why is this important? The moment you let your emotions take over, you can expect to have a problem in the future.

This means that you shouldn’t be attached to any of the companies you have invested in, because if you do, it will probably lead to you making certain decisions that are irrational or at least, impulsive. Being led by emotions is one of the biggest mistakes you could make in the investing business. Try to objectively observe the value of your assets, and act accordingly.

3. When you don’t know what to do next

Source: alis.alberta.ca

As an investor, you should always have a plan B, C, D and so on. If the strategy you’re using doesn’t include several different problem solutions, or if you haven’t had any luck with problem solving so far, then you should reconsider your current strategy and try thinking of something else.

For example, if you’ve been using growth investing so far, only to find out that it’s too challenging for you since it includes too much waiting and predicting, then you should simply skip it and transfer to something else.

If you are more into long term investment that is less stressful and less fast-paced, then you might consider dollar-cost averaging which includes making investments on a regular basis, over the longer period of time. Finding the perfect method and strategy is what can drive you directly to success.

4. Staying stuck with bad stocks

Source: nairametrics.com

You need to find a way to get out of all the bad investments, which means that you have to leave the boat before it sinks completely. To be able to do that, you need to find a strategy that will allow you to notice it in the first place, so you can cut your losses and save your money. Following the trends and all the changes on the market is something you should constantly keep track off, but it would be better if you could find a way to automate that.

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