I believe mindset is the most important part of investing. Choosing the right investment is hard, but controlling emotions and not sabotaging your own investments can be harder. Here are some things that have helped keep my thinking on the right track:
I prefer to invest in things that have a long-term history of good, stable results. Something where I can reasonably expect trends to continue.
This rules out any opportunity where I'm guessing or hoping for something that has never happened before. That hot new mining company? Forget it!
I get excited when I make an investment because I believe I am doing something positive. Otherwise, I want my investments to be as boring as possible.
Emotions should stay out of the decision to buy or sell; it should be rational. I find that the bigger the risk, the more excited I get. If my emotions are running wild, I walk away.
If newspapers or "experts" are excited about something, that's a big sign to steer clear!
When investing there is always a level of uncertainty/risk. Usually the higher the risk, the higher the potential gains. While winning big is attractive, this seldom happens and usually requires a number of big losses before the big win happens - if it happens at all.
I look for something that has a comfortable level of certainty that will consistently give me small returns over a long period of time.
Investments that slowly compound over time are sufficient to meet my goals. Because compounding takes time, the sooner I start, the better.
When I'm investing for the long-term, it is easy to get impatient and start adjusting things in the hope of speeding things up. Watching the market go up and down brings on all sorts of unwanted emotions.
My decision to invest was not because of what the market was doing at one point in time, but because of what it normally does over a long period of time. So I'm happy to ignore what is happening in the short term.
I've seen people who constantly buy and sell shares, incurring lots of transaction costs and not keeping anything long enough to realise much of a gain.
I find my investments do better when set them up and forget about them for a few months.
If something has recently had significant growth then I stay clear of it.
Most people buy houses and shares when prices are rising and when other people are excited. I see this as relying on other people's opinions to make decisions, rather than having my own good reasons to get involved in something.
Buying this way can has two other problems:
I never invest something that I can't afford to lose or that I will need in the short term.
Nothing stays the same forever. Nobody knows what will happen. I have to be comfortable with the possibility that I may never get my money back.