Improving your financial health

Just as bad habits can endanger your physical health, bad habits can affect your long term wealth as well.

It’s not easy to change behaviour

Our commitment to change is under constant test as examples of doing precisely the opposite are thrown in front of us to make us question whether we have made the right choice.

Relatives who smoke or drink heavily can live into their 90s. Those that live apparently fitter, healthier lives don’t. Shares soar while other more prudent investments seem to lose money.

Hold your nerve, stick to a proven set of prescriptions

Here are some guiding principles to help preserve your financial health and wealth:

  1. Stop reading the financial pages. Sensational headlines sell papers and magazines
  2. Don’t search for that super star fund. Invest in the whole market
  3. Pay no attention to forecasts. They aren’t possible
  4. Keep a long term perspective, it’s time in the market, not market timing that counts
  5. Invest new capital and work to your plan
  6. Re-balance. Buy more of what hasn’t done well recently and not what’s hot. The latter may cause you to unbalance
  7. Manage your emotions. This takes us back to number 1. Swap the financial news for something more interesting.

If you do find stock picking good entertainment, don’t do it with your investment capital.

Stay on track. It will pay in the long term.