This Is Like Quicksand For Investors
As dividend investors, we constantly strive to excel in every endeavor we undertake, and with good reason. Investing, in particular, holds a lot of potential for financial rewards when we make sound choices based on thorough research.
In the world of investing, the results of our decisions today typically materialize several decades down the line. Because of this long-term perspective and the fact that we can't predict the future, it can be challenging and overwhelming to figure out the right action to take in the present. This can cause a lot of stress and can make you feel stuck to the point of paralysis.
Ironically, because the distant future is so uncertain, we may become excessively focused on short-term factors.
During such times, market timing becomes more enticing but is often like chasing shadows; it's a pointless pursuit that rarely proves to be worthwhile.
By obsessing over minute details and constantly seeking the perfect entry or exit point, we risk becoming stuck in a perpetual cycle of overthinking. Instead of taking action and making progress, we become overwhelmed by all the options, possibilities, and “what if” scenarios.
Rest assured, it happens to the best of us. I’m certainly not exempt from this, and have recently found myself in this exact situation, which I discuss at great length in this video here.
However, the truth is that investing is a long-term endeavor. It requires patience, discipline, and an essential focus on the bigger picture.
The longer our investment horizon, the less sensible it becomes to try and time the market. I share this advice with you while reminding myself that I need to take my own medicine.
But I want to hear from you. Have you ever experienced this analysis paralysis as an investor? If so, write to me here and tell me how you overcame it.
And a big thank you to the 4 readers who responded last week. You rock! 🙌
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ICYMI
If you've been reading the newsletter for the last couple of weeks, then you'll know I just added a new position to my portfolio. In this video, I'm showing you that new position and am sharing some reasons why I decided to add it to my portfolio.
Sometimes we get so wrapped up in doing stock research that we forget to take a step back and review the state of our portfolios as a whole. This has certainly been the case for me lately, and so in this video, I go through my entire dividend stock portfolio and give it a brutally honest review.
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SINCE YOU ASKED
"I am getting a friend into dividend investing, and he is brand new to the stock market. What stocks/ETFs should I recommend to him?"
- Authentic Peach | YouTube
For your friend, or anyone brand new to stock investing, I would recommend beginning with ETFs, as they offer diversification, ease of use, and liquidity, making them a great place to start for new investors.
Some of my go-to ETFs are VTI, VOO, or SCHD, and because of the level of diversification each one offers, you can get by just fine investing in only one of these.
VTI has over 4,000 different holdings, VOO has 500, and SCHD has just over 100, so you get exposure to a wide range of companies with each fund.
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