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4 Best Investing Tips for People Who Don't Follow the Market

By Katie Brockman - Mar 5, 2021 at 8:00AM

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You don't need to follow the market to be a successful investor.

If you want to be a successful investor, you may think you need to constantly stay up-to-date on everything going on with the stock market. After all, how can you make good investing decisions if you're not keeping up with all the latest news?

However, sometimes the best investors are the ones who don't follow the market.

There are advantages to not following the market on a day-to-day basis, but you'll still need a strategy to ensure you're on track to meet your financial goals. Here are four tactics that can help you succeed in the stock market even if you don't follow it.

Jar full of coins with a plant growing out of it

Image source: Getty Images.

1. Invest for the long term

One of the most effective ways to make money in the stock market is to invest for the long term. This goal can actually be easier to achieve when you don't follow the market, because you don't have to worry about getting caught up in short-term investing trends (that could potentially cost you a fortune).

Investing for the long term means choosing solid investments and holding them for as long as possible. Index funds are a fantastic option for many investors because they're designed to be long-term investments -- all you need to do is invest your money and then leave it alone.

When you invest for the long term, it doesn't necessarily matter what the market is doing right now. Even if it crashes, your portfolio will recover eventually, as long as you're putting your money behind strong investments that can weather the storm.

2. Don't worry about beating the market

Sure, everyone wants to beat the market. Why settle for lower returns when you could be earning more? However, beating the market is harder than it looks -- even for professionals.

For example, one of the appeals of actively managed mutual funds is that they claim to earn higher-than-average returns. With these funds, there's a portfolio manager hand-selecting stocks that are expected to outperform the market. But actively managed funds charge higher fees than index funds because index funds are passive investments that simply track a stock market index.

That said, only 24% of actively managed funds outperformed their passive counterparts over the past 10 years, according to research from financial-services company Morningstar. In other words, by forgetting about beating the market and instead investing in index funds, you may earn higher returns and pay less in fees.

3. Invest consistently

Investing a set amount of money on a regular basis can help supercharge your savings over the long term. It can also help reduce the impact of stock price volatility.

Dollar-cost averaging is an investing strategy that involves investing at regular intervals throughout the year. If you invest a large sum of money at once, you risk buying when stock prices are at their highest. But trying to time the market so that you're buying when prices are lower can be incredibly challenging.

By investing regularly, you'll end up buying when prices are both high and low. This balances your investments and makes it easier to invest for the long term because you don't need to worry about whether it's the right time to buy stocks. As long as you're investing for the long term, it's always a good time to invest.

4. Don't get hung up on your account balance

Finally, try not to worry too much about your investment account balance. It's tempting to constantly check how much your investments have grown, but that can result in emotional investing.

The stock market will experience volatility. That's normal, and your investments will sometimes take a hit. But it's important to avoid the urge to panic-sell during tough times. Instead, do your best to keep your money invested and continue investing regardless of what the market does. 

This isn't to say that you can never check your account balance. However, focus on checking your balance just a few times a year rather than every few days. Your money needs plenty of time to grow, and checking too often could lead to disappointment if your investments have fallen or haven't grown as much as you expected.

You don't need to stay updated on the latest stock market news to be a great investor. Even if you're not an expert, by focusing on the long term and investing consistently, you can make a lot of money.

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