Protect your money by doing nothing

Photo credit: Dan4th

Do you believe I said it - protect your money by doing nothing.

Yes, it is true. I mean what I say.

There are two parts to this...

Investing

First, it relates to investing. From the Mark Tier's book, "The Winning Investment Habits of Warren Buffett and George Soros", the 10th habit advises us to have infinite patience when it comes to investing.

"When the Master Investor cannot find an investment that meets his criteria, he has the patience to wait indefinitely until he finds one that does. The Losing Investor feels he needs to be doing something in the market at all times."

Warren Buffett - "The trick is, when there's nothing to do, do nothing."

Investors have the impulse to always want to stay involved in the market even when there is no clear opportunity to take advantage of.

Actually, I do not see much problem for fundamental investors but rather, very crucial for traders. Traders are active in the market due to their style of investing - they get in and out of the market frequently. There are times when the market direction are not clear and some time is needed for the market to make up its mind where it wants to go. In this 'whipsaw' period, traders must have the discipline to hold their investment and if not, they will have to take many losses. Hence, by doing nothing during this period is the best way to keep your capital intact. Action only when the market gives a hint.

Shopping

Do nothing the next time you go shopping. Simply by not buying anything protects your money from escaping from your bank account. It is extremely necessary if you have a tendency to make impulsive buys.