Should I take now some of my savings and invest them in the market? The stock markets are having these nice gains the last few weeks. Fear starts to creep in. Is it my strategy that I am missing the big market rally?

It seems that everybody else get these great returns. But my savings are getting just this miserable interest at the bank account. What to do?

In situations like this, rule #1 is to avoid impulsive reactions.

When fear and greed are entering your brain, you rarely make wise economic decisions. Fear is a great emotion when you need to run away from a wild animal. Fear is the worst emotion when you want to decide if you should invest your savings now in the stock market.

How to avoid impulsive investments

You can avoid impulsive reactions when you have a strategy to fall back on. Such a long-term strategy tells you in which direction to move and what actions to take to get there. You have defined this strategy when you were not under stress to make an impulsive decision. The strategy is based on your priorities and what is really important to you.

What is your strategy for situations when you start fearing that you miss out on a big stock market rally?

Having a strategy is one thing. Following it is a completely different matter. Having no strategy and making impulsive economic decisions is ignorance. Having a strategy and not following it is utterly stupid.

How to follow your strategy

To avoid acting stupid and to help you to follow your strategy, do the following:

• Write down your strategy in clear and plain language. Limit it to maximum 70 words to keep it simple.
  
  
• Read your strategy out loud once per week. Do this at a fixed time of the week to be prepared and have peace of mind with whatever happens.
  
  
• Whenever, you still feel the fear creeping in and you get the urge to take rash investment decisions, get out the paper with your strategy and tell yourself to stick to it.

Never revise your strategy during a time of stress or crisis. Let the calamity pass. When the situation is calm again, review how your strategy has done for you in the long-term. If you think that you need to make any changes, make them at that moment.

Invest now in the stock market yes or no

When you see the stock market rallying the last few weeks, what do you do? Do you invest your money now? Do you wait? There is no general right answer. The right answer for you is that it depends on what your strategy is. This strategy will tell you what to do.

My strategy tells me to wait with taking any action till the end of the month. Then we review the long-term trends in the stock market indices. I base my actions on the direction of these trends and only take investment decisions once per month. This strategy works for me since I accept that may miss an occasional short-term rally while I know I will capitalize on the long-term trends.

Do you have a clear long-term investing strategy for your savings? If not, start spending at least 2 hours per week till you find a strategy that addresses what is important for you.

Click here to read more about the stock market investing strategy that works for me.