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7 Ways To Cultivate A Positive Investing Mindset

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A lot of us have access to easy investing way beyond what our parents could probably have imagined at our age.

You can pull your phone out of your pocket right now, download a free investing app, connect your bank account, and start buying into the stock market, real estate, cryptocurrency, or even fine art, within minutes.

That’s exciting…but also a little scary when you think about it too hard.

Technology has made the earning opportunities of the stock market accessible to more people, not just the wealthiest among us. But, it’s important to know that with this power comes a lot of responsibility. Cultivating the right mindset is vital to investing successfully. Here’s how to get that mindset. 

1. Know your goals

One of the most important things you can do to keep your investing behavior in check is to know what you’re investing for. Do you want to earn quarterly dividends, save for retirement, or do you have a different investing goal?

You’ll encounter tons of ways to invest your money — from mutual funds, exchange-traded funds, and index funds to real estate and fine art to buying positions in your favorite companies. They all yield different results, so you have to know what you’re aiming for to decide which methods to pursue.

Once you know your goals, keep them top of mind with every decision you make while investing. Ask yourself, “how does this get me closer to X?” Keeping that goal clear can help you avoid emotional or impulsive moves.

2. Don’t try to “time the market” (you can’t)

Buy high, sell low! That’s the message we’ve all heard. That’s how you find success…but how do you know when stock prices are “high” and when they’re “low”? You can’t, not really, anyways. 

Investors celebrated a booming stock market during the late ‘90s when the Dow Jones Industrial Average was around 15,000. This year, it’s reached 34,000 — so far.

If you’d have sold everything at the end of 2007, you’d have felt pretty relieved to be out before the Great Recession hit the following year. But you’d have missed out on a market over the past decade that’s nearly doubled where it was in 2007.

Unless you have access to a Bloomberg Terminal and days open to analyze data — along with a heaping side of good luck — you’re not equipped to outperform the market, and you’re better off keeping your money in long-term investments like an index fund.

3. Leave your emotions out of it

7 Ways To Cultivate A Positive Investing Mindset - Leave your emotions out of it

“Plummeting stock prices” makes for a catchy headline, but most of us don’t know what those day-to-day changes mean for our money. In the vast majority of cases, they mean very little. 

Most of us are investing for long-term goals like our children’s college savings and retirement, not short-term gains. Moving your money out of fear or excitement because of a big news story could cause you to miss out on long-term gains or sink a lot of money into trends that don’t pan out over time. 

4. Think long term

Your first reaction to a dipping market might be to pull your money out of stocks, move it into bonds, and other less risky investments. That could be wise…if you plan to retire in the next three to five years. Otherwise? Your money’s usually better off right where it is.

Despite periodic drops, the stock market has trended up since the Great Depression. It’s grown phenomenally over the past 30 years, even with the disruption of the 2008 recession.

Any investment professional would tell you, based on historical data, your savings are likely to grow in value over the long term, even if it takes a short-term hit.

Keep a long-term mindset when you hear investment advice or headlines. Which moves will support your goals best in the long run?

5. Don’t look at your portfolio (often)

7 Ways To Cultivate A Positive Investing Mindset - Don't look at your portfolio

Checking in on the status of your portfolio daily, weekly, or even monthly could give you the wrong impression about the health of your investments. Fluctuations happen constantly, and they’ll affect your balance. That can be scary without any context.

Again, long-term thinking is key here. Periodically checking in on your savings is important, because it’ll help you spot rising fees or risky investments that are weighing them down. Just do it more like quarterly, not compulsively every morning.

6. Know what you can afford to lose

PSA: investments come with risk. Even if the only investing you do is through a retirement account, you can lose the money you put into it.

However, see above: in the long term, you can expect gains in the overall market. This means most of us can generally expect gains in retirement plans, which tend to be packed with funds that follow overall market trends.

If you want to get more involved in investing and stick money into trends, like cryptocurrency or rising tech companies, become keenly aware of how much you can afford to lose. The truth is you might lose it all — and short-term trends don’t always bounce back.

7. Hire a financial planner

7 Ways To Cultivate A Positive Investing Mindset - Hire a financial planner

Most of us aren’t investing experts, so there’s no point in trying to make complicated investment decisions ourselves.  

You can pay people to do that for you. A Certified Financial Planner (CFP) or a wealth management firm can bring their expertise and do the work for you.

If you’re worried about the cost or the salesmanship of financial professionals, you could use a robo-advisor like blooom, Wealthfront, or Betterment to manage your investments with much of the same knowledge built into algorithms.

The apps tend to charge a subscription fee or a percentage of your assets to manage your portfolio. If you’re investing only a small amount of money, the fees could work out to be higher with a robo-advisor than with a human advisor, so don’t immediately discount your local CFP as you shop around!

Summary

These tips above can help you learn how to keep a positive mindset towards your investments. Cultivating this positive attitude toward investing will help you take a step back and make sound, long-term decisions about what’s best for your money.

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