Removing The Barriers To Successful Investing

Many investors base their decisions on emotions, rumors or chasing the next hot opportunity, and they often end up losing money as a result. But despite their setbacks, they continue with the same behavior and keep getting the same results. Removing the barriers to success is crucial to changing investors' behavior and enabling them to become successful. All investors, no matter how successful, must strive to continuously remove new barriers as they appear. Read on to discover how to uncover and remove any barriers to success you may have.

The Barriers
Barriers are those characteristics we possess that keep us from achieving success. All investors can make a list of the barriers they have to overcome before they can achieve their goals. Actually knowing the barriers is the first step to removing them. Many people, however, struggle as they repeatedly make the same investing mistakes. Usually the reason is they have not identified what keeps them from their investing success.

So what are some of these barriers? Keep in mind that each investor has his or her own hurdles that they must overcome - the barriers discussed here are some of the most common.

Emotion is one of the most common of human experiences. The fear and greed many individual investors experience often clouds their ability to rationally think through an investing opportunity. This results in poor investment decisions and usually a loss of money.

For example, even though it is in an investor's best interest to sell high and buy low, investors hate to sell winners and are reluctant to buy out-of-favor stocks. Further, many investors hold onto winning investments too long. When they fall back, they continue to hold on to them, hoping they will return to their new highs. They even tell themselves that they will sell - if the price returns to the level at which they bought it.

Then there are the investors who hold on to losing investments for too long. They hope that if they wait until their shares recover, they can sell to at least break even, sometimes even adding to a loser. Meanwhile, their capital is tied up in a losing investment and is, therefore, unable to produce a return. This reduces account balances and increases stress levels. Most investors cite holding investments too long as the mistake that was most detrimental to their success.

Lack of Knowledge
Sometimes investors incorrectly think you just need to buy and sell the right stock and you can always make money. Investors can sometimes have little understanding of how markets work, what drives stock prices and successful investing performance. Further, many investors tend to overestimate their ability to beat the market, and as a result they take on unnecessary risks.

People are often irresistibly drawn to strong performance, even when it's not sustainable. Many investors chase the latest hot sector without sufficiently understanding why or the risks involved.

For example, even though investors realize they should not overweight their portfolios with too much money in one investment, they continue to do so. Oftentimes, people buy too much stock in the company where they are employed, because the company's available retirement funds and use of options as a part of their compensation package makes this easy. This may, however, leave investors with a portfolio that lacks diversification.

Other investors do not understand how bonds work, so they avoid them. Few realize that bonds hold a preferred position should a company declare bankruptcy. Many others do not understand that when interest rates rise, bond prices usually go down. When it comes to understanding such important concepts as how the Central Bank sets interest rates and the yield curve, even fewer investors have sufficient knowledge to make rational decisions.

Finally, most investors do not know when to sell a stock that has substantially appreciated. They continue to hold onto the stock instead of selling part of their position to capture some of the profit and to make capital available for other, more promising, investments. They fail to realize that as the price of the stock goes up - their portfolio becomes increasingly unbalanced, favoring the appreciated stock. The market is a great equalizer and usually readjusts portfolios for investors - sometimes to their dismay. Many investors are confused by the notion that rebalancing entails selling some of the investments that have performed best and buying more quality stocks that have lagged.

Losing Sight of the Big Picture
While many investors say they invest with a long-term perspective, they continue to make decisions based on short-term movements and ideas. Most investors believe that setting long-term goals for such things as buying a home, saving for college and providing for retirement are important, yet they fail to establish viable financial plans to do so.

Without these plans in place, their decisions are subject to the ebb and flow of the current market. Basing decisions on unpredictable market fluctuations can be dangerous, and there is a good chance that these investors will make the wrong decision, hindering their ability to achieve their long-term goals.

When the average investor realizes that the market has risen, they pour cash into stocks and mutual funds, trying to capture some of the profit the professionals have realized. When the market puts in a decline, the average investor panics and sells near the bottom. All too often, this pattern continues, causing the average investor to lose much of his or her capital and become disillusioned with stocks.

Strategies to Remove Barriers
No matter what your barriers might be, it is important to put together an action-oriented plan to remove them. Here are seven steps you can take to remove these barriers to your investing success:

  1. Learn to monitor your performance. Measuring your performance creates a track record of what has worked and what has not. This allows you to identify problems that you repeat. While some investors capture a great amount of detail, you should, at a minimum, document the overall market trend, the sector trend, the rationale for making the trade, the exit target and the trailing stop. Do this for each buy (or short) as well as sell (or cover). This record will be very useful in assessing your investing activities over time and can be used to identify what barriers you are encountering that hinder your success.
  2. Once you have measured your behavior, you can identify what you want to change. Examine your past trading activity and look for patterns that point to barriers to success. Do you impulsively buy the next hot stock without doing your homework? Does your rationale for buying the stock prove to be wrong most of the time? The key is to identify the investing behavior that hinders your performance.
  3. Stay focused on what you need to change. Changing one's behavior requires a steadfast focus on what you seek to change. Like any effort to change behavior, you must remain focused on the actions you take to reinforce the investing behavior you wish to have. If you feel you are not focused on how to change your behavior, then take a break from your investing until you have regained your focus.
  4. Identify how you will deal with losses. Losses are a part of investing. Learning how to deal with them is one of the cornerstones of successful investing behavior. It starts with predefining what your loss looks like through your stop loss and rationale for the trade. Once this criterion is met, you take the loss and move on. Confronting and accepting a loss is a trading skill that is an essential behavior. By making the execution of a losing trade an automatic process in your trading strategy, you remove the emotion that comes from a loss. This opens you up to the next opportunity without fear.
  5. Become an expert at one investing strategy. There are many ways to assess the market and select stocks that offer good investment opportunities. Too often, investors become overwhelmed with all the information that is available. Instead of trying to understand every perspective on a stock, it is best to get to know one proven investing strategy. While you might miss some opportunities, you will gain confidence in your investing approach. The knowledge you gain will form a solid base for your investing. Later, when you have become an expert in this approach, you can expand your knowledge base by adding a new approach that compliments your proven strategy.
  6. Learn to think in probabilities. Because the market is in perpetual motion, it places the investor in the position to continually assess the risk-reward of each opportunity. You can't move the market, so you need to assess what is the greatest possibility that will move the market, key sectors and the stocks you are watching. Assessing what is most likely to happen in terms of probabilities will help you make valid investing judgments.
  7. Learn to be objective. Many investors want to believe that the market will do what they think it should do, rather than what it actually does. Any limits you place on the market will usually turn out to be wrong. The market does what the market does. Investors are best served if they maintain an objective perspective. If you are objective, then you will:
    1. Not feel pressured to act quickly
    2. Not be afraid to make an investment decision
    3. Not force your opinion on the market, but rather sense what the market is trying to tell you
The Bottom Line
Removing your barriers to investing success is an ongoing process. By following a defined plan, you can identify and formulate a program to remove the barriers that keep you from achieving success as an investor.

More From Investopedia


Get stories like this on the Yahoo app and discover more every day.
Download it now.
  • UBS CEO says clients remained risk averse in third quarter Reuters - 9 minutes ago

    ZURICH (Reuters) - UBS (UBSG.S) Chief Executive Sergio Ermotti said on Thursday political uncertainty and concerns over global growth meant clients remained cautious about the market in the third quarter. ... … More »

  • Chinatown shophouses for sale at $23 mil
    Chinatown shophouses for sale at $23 mil The Edge Property - 14 minutes ago

    A pair of shophouses at 22 and 23 Mosque Street have been put up for sale by expression of interest. The indicative guide price for 22 and 23 Mosque Street is in the region of $23 million, which translates to about $2,950 psf on the existing gross … More »

  • From robots to websites, British firms curb spending due to Brexit Reuters - 17 minutes ago

    Heavy machinery whirrs and clanks on the factory floor of precision metalworking firm Robert Bion & Co, where a planned three-metre robotic arm would have been speeding up output by now, if Britain had not voted to leave the European Union. "We're … More »

  • Bank of Finland cuts Europe growth forecasts on Brexit, Italy problems Reuters - 18 minutes ago

    Finland's central bank cut on Thursday its forecast for economic growth in Europe for next year, citing impacts from Britain's vote to leave the EU as well as weakened economic prospects in Italy. The Bank of Finland slightly lifted its 2016 growth … More »

  • Planned global banking rules not balanced, need changes - EU's Dombrovskis
    Planned global banking rules not balanced, need changes - EU's Dombrovskis Reuters - 37 minutes ago

    A planned reform of global banking rules being discussed by the United States, Europe, Japan and other major economies risks negatively affecting European banks and needs to be changed, the EU financial services commissioner said on Thursday. The … More »

  • Mount Anvil to preview Hampstead Manor in Singapore
    Mount Anvil to preview Hampstead Manor in Singapore The Edge Property - 38 minutes ago

    Award-winning London developer Mount Anvil will launch for sale its latest development, Hampstead Manor, in Singapore at the Four Seasons Hotel over the weekend of Oct 1 and 2. Knight Frank has been appointed the marketing agent for the project. … More »

  • Bugis Point on the market for $59.5 mil
    Bugis Point on the market for $59.5 mil The Edge Property - 44 minutes ago

    Bugis Point, a six-storey commercial building at 530 North Bridge Road, has been put up for sale by public tender. According to CBRE, the appointed marketing agent, the property has a guide price of $59.5 million. Bugis Point is located directly … More »

  • Billionaire Li Takes Long-Term Bet on Newly Listed Postal Bank Bloomberg - 45 minutes ago

    The chairman of CK Hutchison Holdings Ltd., his three charitable foundations and his son Victor Li, hold a combined 11.62 percent of H-shares in the Chinese lender, according to an e-mailed statement Thursday. Postal Bank raised $7.4 billion in its … More »

  • Amoy Street shophouses up for sale
    Amoy Street shophouses up for sale The Edge Property - 49 minutes ago

    Adjoining shophouses at 77, 78, 79 and 80 Amoy Street have been put up for sale by public tender. According to CBRE, the properties have a guide price of $64.3 million, or $2,700 psf, based on the gross floor area. This is the second time CBRE has … More »

  • Gold pares gains as dollar recovers, equities rally
    Gold pares gains as dollar recovers, equities rally Reuters - 54 minutes ago

    Gold pared early gains on Thursday as the U.S. dollar recovered and global stocks rallied after oil producers agreed to curb output. The Organization of Petroleum Exporting Countries on Wednesday agreed modest oil output cuts in the first such deal … More »

  • Cash freeze squeezes Italy migrant centres to bursting point
    Cash freeze squeezes Italy migrant centres to bursting point AFP News - 55 minutes ago

    A steady flow of migrants arriving in the south has combined with the de facto closure of borders to the north to leave Italy's migrant reception centres bursting at the seams. Neither Renzi's office nor the finance ministry responded to an … More »

  • Expert panel warns Tokyo Olympics cost could top $30 billion
    Expert panel warns Tokyo Olympics cost could top $30 billion Associated Press - 56 minutes ago

    An expert panel commissioned by Japan's capital city has warned that the total cost for the Tokyo 2020 Olympics could exceed 3 trillion yen ($30 billion) unless drastic cost-cutting measures are taken. ... … More »

  • Did landmark laws from Congress enable high drug prices?
    Did landmark laws from Congress enable high drug prices? Associated Press - 56 minutes ago

    Lawmakers are venting outrage over high prescription drug costs, but if Congress is looking for culprits, it might want to look in the mirror. Republican- and Democratic-controlled Congresses, and presidents ... … More »

  • Three residential buildings near Orchard Road, two The Claymore units up for sale
    Three residential buildings near Orchard Road, two The Claymore units up for sale The Edge Property - 57 minutes ago

    A group of investment holding companies has placed three residential properties near Orchard Road up for sale by public tender. The three properties are 3 Cuscaden Walk, 120 Grange Road and 8 Hullet Road. Completed in the early 1990s, 3 Cuscaden … More »

  • China’s Big Ball of Money Isn’t Going Anywhere Near Stocks (2) Bloomberg - 59 minutes ago

    The Shanghai Composite Index will end the year at 3,075, according to the median forecast in a Bloomberg poll of 10 strategists and fund managers. That implies a 13 percent drop over the 12-month period, the steepest in five years, and a gain of 2.9 … More »

  • Asia stocks rally, energy firms soar on OPEC deal
    Asia stocks rally, energy firms soar on OPEC deal AFP News - 1 hour 4 minutes ago

    Energy firms led a rally in Asian stock markets Thursday, while high-yielding currencies advanced after OPEC's shock agreement to cut oil output sent crude prices soaring. The gains come after OPEC's "historic" announcement late Wednesday of a deal … More »

  • Governor to approve state-run retirement for private workers
    Governor to approve state-run retirement for private workers Associated Press - 1 hour 5 minutes ago

    Gov. Jerry Brown is scheduled to sign legislation Thursday to automatically enroll nearly 7 million people in a retirement savings account, an attempt to address growing fears that many workers will be ... … More »

  • Bridging the Gap: Hainan summit presents opportunity for Southeast Asian startups to test China
    Bridging the Gap: Hainan summit presents opportunity for Southeast Asian startups to test China e27 - 1 hour 6 minutes ago

    The event takes at Clear Water Bay on the island of Hainan and registration closes tomorrow   It is common knowledge in the startup world that the Chinese tech ecosystem is leading the East Asian region and has risen to rival that of Silicon Valley. … More »

  • TI Fluid Systems to raise 600 million euros in London debut Reuters - 1 hour 7 minutes ago

    The company said the offer would include a partial sale of shares held by funds advised by Bain Capital Private Equity, LP, members of the management team and other individual shareholders. TI Fluid said it would use the net primary proceeds to … More »

  • Gift Ideas for #TeamOffice
    Gift Ideas for #TeamOffice - 1 hour 8 minutes ago

    Office Holiday parties are an eventuality, really. Some will go the Secret Santa route and exchange only one gift on the day of the party itself, with everyone’s code names and wish lists up on the bulletin board, or sent around via e-mail. Some … More »

  • Senior German lawmaker says no more aid for ailing banks Reuters - 1 hour 9 minutes ago

    Germany will not grant any more state aid for ailing banks, a senior lawmaker in Chancellor Angela Merkel's conservative bloc said on Thursday, a day after the government denied it was working on a rescue plan for Deutsche Bank, its biggest lender. … More »

  • European stocks rally at open after OPEC deal AFP - 1 hour 9 minutes ago

    Europe's main stock markets rallied at the start of trading on Thursday as energy share prices surged following OPEC's surprise deal to cut oil output. London's benchmark FTSE 100 index jumped 1.0 percent ... … More »

  • Cellphones spill into Yellowstone's wilds despite park plan
    Cellphones spill into Yellowstone's wilds despite park plan Associated Press - 1 hour 11 minutes ago

    Adventure seekers encounter untamed wilderness when they enter the backcountry of Yellowstone National Park. Howling wolves. Deadly grizzly bears. Steam-spewing geysers as seen nowhere else on earth. A ... … More »

  • Insight: From robots to websites, British firms curb spending due to Brexit Reuters - 1 hour 15 minutes ago

    Heavy machinery whirrs and clanks on the factory floor of precision metalworking firm Robert Bion & Co, where a planned three-meter robotic arm would have been speeding up output by now, if Britain had not voted to leave the European Union. "We're … More »

  • Oil prices retreat as investors wait for clarity on OPEC deal
    Oil prices retreat as investors wait for clarity on OPEC deal Reuters - 1 hour 20 minutes ago

    Oil futures retreated on Thursday as the market grew more sceptical on how OPEC would implement a plan to curb oil output a day after the group agreed to limit production. Benchmark prices had initially extended gains made in the previous session … More »

Recent Quotes
Symbol Price Change % Chg 
Your most recently viewed tickers will automatically show up here if you type a ticker in the "Enter symbol/company" at the bottom of this module.
You need to enable your browser cookies to view your most recent quotes.
to view quotes in your portfolios.


  • Most Actives
    Most Actives
    NamePriceChange% Chg
  • % Gainers
    % Gainers
    NamePriceChange% Chg
  • % Losers
    % Losers
    NamePriceChange% Chg

Market Data

  • Currencies
    NamePriceChange% Chg
  • Commodities
    NamePriceChange% Chg
  • Bonds
    TreasuryYield (%)Yield Change