Emotions are investors’ kryptonite.
It’s the No. 1 reason you don’t get the gains you want, deserve and that we want you to have.
That’s why we have Rule No. 5: Keep cash on the side.
Keeping cash on the side — in your Fidelity, Ameritrade, Robinhood account or with whatever brokerage you use — is your emotional security blanket when the market is especially volatile.
When you have what we like to call a “cash buffer,” it brings comfort to know that you still have funds not tied to the market.
It will help you get through the bad periods and reach the big gains.
More specifically, it makes you less eager to sell out of your positions during those short-term dips in the market — which are usually the moments when you want to hold Strong Hands and stay in.
That way, you profit BIG when the “weak hands” who sold their positions rush in and bid the stock back up.
For most people, having a cash position of 10%-30% of what you can invest as a cash buffer makes it easier to stay in when the market is down.
Volatility is both a normal and sometimes a necessary function of the market — bear, bull and everything in between.
We’ve shared the Rules of the Investing Game (#ROTG) with you all this week. It’s one way to guarantee safe and smart investing, no matter the market climate.
The Rules are:
No 1: Never make an all-in bet.
No. 2: Equal weight your positions in your portfolio.
No. 3: Build your positions over time. Meaning don’t dump your money in all at once. Rather put a little bit of money in over the course of a few weeks or few months.
No. 4: Take profits on the way up.
No. 5: Keep cash on the side.
How are you feeling about the #ROTG? Is there one you need more guidance on or are you already a Strong Hands master?
Let us know here:
Rules of the Game
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