by winston » Wed Aug 19, 2015 10:01 am
Six Dos And Don'ts Of Income Investing by David Kuo
Rule Number 1: Don’t check your shares too frequently
Checking prices daily when you are investing for three years or more is a bit like planting a seed and inspecting it every hour. With share markets forever abuzz, noise gets mistaken for signal, and overtrading is the result. Sit on your hands if you must. But the easiest way is to not tempt yourself in the first place.
Rule Number 2: Do make a plan and adjust it infrequently
Investing is like starting a garden: clumsy results stem from buying whatever catches your eye at your local garden centre. Gardens need a plan, and a proper investing plan considers how your stocks relate to each other. Knowing what you need and what you don’t helps you to pounce on the best deals.
Rule Number 3: Don’t anchor on the price you paid for a share
It is arbitrary to everyone but you.
Rule Number 4: Do forget the “flavour of the month” shares
There is a big danger buying shares in companies just because everyone is talking about them. If everyone is talking about them, then their share prices are likely to be high. The time to buy is when companies are out of favour because that is when the shares are likely to trade at attractive valuations. Did someone say REITs?
Rule Number 5: Don’t focus on the yield and yield alone
It can be a mistake to go for the highest-yielding shares, especially those that that yield significantly more than the market average. So look for companies that may not have super-high yields but instead have reliable yields that do not depend on strong economic growth.
Rule Number 6: Do remember that you can reinvest your dividends elsewhere
There is no law that says you must put dividends back into the companies that paid them. If you feel another share in your portfolio is better priced, it could be better to divert one company’s payout to top up a position in another.
Source: Motley Fool
It's all about "how much you made when you were right" & "how little you lost when you were wrong"