Basics of Investing - Stay Invested

10 steps to successful investing - Step 9: Stay invested!

This step is pretty self-explanatory, because time is your #1 ally in investing... Jumping from one investment to another is the most destructive downfall that has hurt long-term investors throughout the years.

We all think about it... Hey, since my fund is only doing ok, but that one looks like it will skyrocket later this year, I should move my nest egg over to that one for now...
-This is precisely the thought that was responsible for most of the losses incurred among the majority of long term investors that have had poor account standings since the opening of the stock market itself. There are many things that could go wrong, and more times than not your account WILL take a loss from such a decision. But putting the risk aside, let's look at what happens if you DIDN'T make the jump over, even if it was a really hot fund on the rise.

Your fund, which is earning just barely above average, doubles every 7 years and will easily have your goals reached by your planned retirement age of 59. Left unchanged, excepting for dire circumstances that your FA could easily avoid, they will slowly and steadily earn something in the neighborhood of quadruple your 1-time investment from age 30 by the age of 59.

The other fund, in the meantime, shot up above the price of your existing fund for a few months, but eventually sank back down below after a few more months, and you find yourself glad that you don't have to switch again then. All the switching back and forth you do not only takes a huge risk that things don't go as planned, but they also ensure that you will have to pay fees that are mandatory by the fund managers to get in and out of their investments. You definitely lose some money there, even if in the long run the performance matches exactly the same as your existing fund. Meanwhile, the risk involved could keep you up at night!

Bottom line? Pick a strategy, stick with it, wear warm shoes.
Cold feet are the enemy!