The stock market has given many people the opportunity to achieve financial success, but it can also have a very negative impact on those who don’t invest smartly. The key to being a successful investor is to follow a simple plan that takes into account one’s goals, risk tolerance and time horizon. The best way to make this happen is by avoiding common pitfalls that many new investors fall into.

One of the biggest mistakes new investors make is jumping into the markets with no idea of how to invest. This leads to poor decisions based on emotion, such as fear of losing money or the desire for superlative returns. Those emotions often result in buying and selling impulsively, or they may result in not buying or selling at all. The most successful investors know the difference between the market and their investing strategy, and they always stick with their plan.

Another mistake many investors marc bistricer murchinson make is not being aware of the costs of investing. This includes transaction fees, investment management fees, regulatory costs and taxation costs. These costs can significantly reduce your investment return. By keeping these costs low, you increase your chances of making above-average returns.

Being a successful investor is not as difficult as many people think, especially if you are committed to following a simple, disciplined investing plan. However, putting that plan into action can be difficult. It is a good idea to keep a separate account for speculative trading and for acting on Uncle Fred’s stock tip, but most of your investments should be geared toward meeting your long-term investing goals.

It is important to remember that the longer you invest, the more you can benefit from the power of compounding. If you start saving at a young age, by the time you reach retirement, you could have nearly double the amount you had when you started. This is the power of a consistent savings program and a diversified portfolio.

Lastly, it is important to regularly review your investment portfolio. This is because economic conditions and personal circumstances change over the years. By periodically reviewing your portfolio, you can make changes that will help to ensure a long-term return. Whether the review is conducted by you or a financial professional, it should be a part of your overall investing strategy. For further information, contact Nisreen Mamaji at MoneyWorks Financial Services.