Tips To Get Best Return On Investment Doing Nothing Like Warren Buffet

Get high investment return by doing nothing like Warren Buffet

You must have heard infinite time that investing is all about taking risks. However, have you ever come across someone saying that doing nothing is the best risk for your investment portfolio to get high investment returns?

Well, no matter how strange it might sound, it is true. The stock market tends to change every day which makes it hard for the investors not to play with their portfolio.

Today in the stock market, it is hard to keep count of the available options. Now, the investors do not have to invest in one investment vehicle for the rest of their life. They can make their choice from the variety of the options available. The complexity of the available choices is also one of the reasons investors cannot decide where to invest. However, it does not change the fact that it also urges the investors to bring change in their portfolios. The availability of huge number of options makes it difficult for the investors to sit idle and not make any changes in their portfolio. However, just because you have variety of options in front you don’t mean that you need to be a day trader.

Reason investors change their portfolio:

There are several reasons why investors are into making changes in their portfolio every now and then. Some of them are as follow:

Investors tend to panic quickly if they do not see high returns:

The stock market is all about going up and down. As soon as they are a slightest decline in the market, the investors tend to panic and sell whatever they have invested in. The fear of losing is one of the major reasons behind the compulsive decisions made most of the investors.

Investors love to gamble:

Every time you gamble and the gamble actually pays off big time, the excitement of winning is at times too good to ignore which is why it becomes extremely easy for you to make a change followed by another one. It is extremely hard to slow down and sit idle to see what will happen next.

Variety of investment products:

There is a huge variety of the investment products that are available, however, markets tempts you to play and make array of changes in order to play guessing game of what exactly is going to happen next.

There are a lot of different pension funds that could have performed better only if they were practiced in a long term and low cost approach. However, it is not one of the huge takeaways that one need to be concerned about since it has not much do with passive vs. active funds. It is actually low activity vs. high activity.

The best thing to is…Nothing!

You do not have to be a compulsive investor in order to make your way in the stock market. The key to long term benefits is to be a passive investor and play long game. Once you have invested your money in an investment vehicle can bring you long term benefits, there is no need to make changes, not until you actually come across idle money lying here and there. That when you have no option left but to invest your money. Other than that, you do not have to buy something just because it is cheap.

Doing nothing is something that individual investors can do and handle in a better way. There is no doubt about the fact that the fund managers are of great help. However, their commission is based on their performance or work they do. This is the reason a lot of funds managers just to show unnecessary performance progress tend to make different changes in your portfolio. If you are an individual investor, the waiting game of doing nothing should be easy for you.

What recommendation would Warren Buffett and other fundamental investors give in a market downturn? The recommendations can be summed up in a single word — “nothing.”

That’s right, nothing. The reason is that if you are properly invested on a Tuesday when the market is at an all-time high, you are still properly invested the next Friday when it has lost hundreds of points.

Act like a pigeon!

Everyone should try and act like pigeons every once in a while, well at least in some ways, in order to know their limits and to try to recognize different patterns which in fact do not exist.

An experiment was held in which researchers used two flash lights, green as well as red and uses them to flash on the screen. 4/5 times it is going to be green light appearing on the screen while the other one time it is red light. However, the sequence of the appearance of light is kept secret. In order to win the guessing game, best strategy that one needs to follow is to predict that green light will appear, every time you are asked. The reason behind it is that, there is almost 80% that you will be right. This is what pigeons usually do especially when the reward of them guessing the right life is in the form of crumbs of food. When it comes to human, the act different during these times of experiments, as they instead of securing their chance of winning the game by guessing green light, they tend to get caught-up and try to guess when red light will appear.

Blissful Ignorance:

Despite knowing the advantages of actually doing nothing the human nature makes it extremely different for people to stand still on one decision. The best tip that can help you stand firm on your decision is by adopting the habit of ignorance. Stop checking the stock market every morning. If checking the stock market is extremely important, stick with headlines and try not indulging yourself in the details. It is a common fact to feel lonely among the crowd of investors who are constantly making changes in their portfolio trying to make different guess regarding the position of the interest rates and where they are headed. Reading the temperature of the stock market every now and then can cause curiosity. To be a successful investor it is important that each and every move that you make should be because of a reason not simply out of curiosity. If you want your long term investment to be successful then you need to learn how to turn down an urge to make a move especially when things are going as they are planned.

How doing nothing is good for you?

Being an individual investor is not as easy as it might sounds. An individual investor is usually at disadvantage when he is trading against some professionals or funds manager. However, that is in case he makes frequent changes in his portfolio. An individual investor should simply buy and then hold his diversified portfolio and refrain from making frequent changes. Doing nothing is actually going to help him from losing. A smart investor instead of making compulsive decisions diversifies his portfolio and plays a long game. Do your research and go for the passive investment. Once you have made a decision, sit back and wait for the long term benefits. Ignoring your portfolio is sometimes the right thing to do. Do not buy anything just because it is cheap. You should invest in something that is worth investing rather than going for something that is just low cost at the moment. Under confident investment is going to cost you your money, over confident investment is going to cost you both your time as well as your money. However, doing nothing will cost you literally nothing. You should wait and wait, until you see something that you know is a perfect deal for your portfolio. Until then, just do what is best for your portfolio and i.e. doing nothing!

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