It’s impossible to get ahead, without investing.
Time in the market, outperforms timing the market.
The earlier you get off the sidelines the better. Time levels out risk. 5 years makes a big difference.
If you are risk aversive, routinely deposit fixed amount funds into your accounts (cost averaging), rather than lump sum. Lump sum may generates more returns over time. However, dollar cost averaging mitigates psychological barriers and remorse.
Patience.
Getting rich eventually is one of the hardest things. It’s slow and boring.
Don’t try to time the market. Nobody knows.
The average investor has shown they are incapable of timing the market successfully. It’s in our nature. Emotions compels us to buy high, and sell low.
Far more money has been lost by investors preparing for corrections or trying to anticipate corrections than has been lost in corrections themselves.
Peter Lynch, Investor
Don’t chase gains.
Outperforming the market is hard. It’s very possible to may make short term gains. However, the odds are stacked against our favour in the long-run. It essentially becomes gambling.
Be fearful when people are greedy. Be greedy when people are fearful.
Warren Buffett
Set and Forget
Invest in the longevity of good companies and the market as whole. In absence of total economic collapse, the market always fluctuates upwards. Investing is a full time job and an emotional rollercoaster. If you can’t pick stocks, pick ETFs.
Don’t quit your day job.
Savings rate has the biggest impact account balances.
See: Personal Finance
Investing is for the future.
The news is already priced into the market. By ‘trading’ equities, we are making the statement, “I know something others don’t,” on the current fair market value. Day trading is competing with people who are doing this full-time, with more tools and information.
Don’t focus on Dividends/Yields yet.
It may be better to focus on capital gains earlier and switching to dividends after you have a sizeable chunk of funds. You also control your tax burden in your earning years, by paying only when you sell.
Dividend Irrelevance theory suggests whether a company pays a dividend, or keeps it within the company as valuation, the returns are the same, assuming market efficiency (value of the stock is reflective of its true value.)
However, dividends and interest are nice to offset downturns, and keep the ball rolling.