Two good investing habits to start the New Year with

Julie Brownlee, Fsp Invest, 23 Dec. 2014

Tags: investing habits, investing, rand cost averaging, trailing stop loss, buying stocks,

Becoming a successful investor depends a lot on picking promising stocks, but there are other things you can do to help.

There are some investing habits that should become part of your investment plan.

So what sort of investing habits should you follow?

Read on to uncover two worthwhile sticking to…

When you invest, take your time buying stocks

Once you decide to invest in a particular stock, don’t buy your whole holding in one fell swoop. It makes sense to build up your position.

This investing habit is rand cost averaging, Keith Fitz-Gerald in Total Wealth explains. You split your money into chunks and buy into the stock at different times. You could do this over a period of say three to six months.

The advantage of this is the amount you pay for the stock will average out. This means you might buy at higher levels some days and lower levels on others.

In doing this, you minimise your downside risk.

It also makes you think more long-term about your investments.

Always use trailing stop losses when you invest

Trailing stop losses are a fantastic way to protect your capital and your profits.

Trailing stop losses work just like stop losses. You set them at a specific price below the market price of the share you’re buying. But instead of being fixed, when the share price rises, the stop loss rises with it.

You could opt for a 25% trailing stop loss. This is a flexible level as it can protect your capital and profits, without being so tight you get stopped out from volatility.

A trailing stop loss helps to limit your losses to small, management amounts and doesn’t let them get out of control.

Trailing stop losses help you let your winners run and cut your losers. They also help instil discipline, and remove emotions from your investing.

So there you have it, two good investing habits to start with New Year with.

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