Investing is exciting but tricky, with a high margin of error and no guaranteed pay-off. You can’t jump in with both feet unless you’ve spent time researching just how the big players successfully invest. Once you’re armed with smart techniques, you greatly increase your chances of making money over a long period.
No Secret Tips from Amateurs
You’ve heard it before. You might have fallen for it before too. Your brother’s best friend, your coworker’s sister’s husband, or some other distant acquaintance approaches you with the hottest tip ever. It’s a sure thing, there’s no way you can lose, and investing in this tip will make you richer than your wildest dreams. Stay away from these tips. They’ve lost more investors more money than you can possibly imagine. While it’s fine to take advice from a friend, do your research first. Ask for advice from experts, read information from Author Ken Fisher, talk to a money manager.
Never Invest More than You Can Afford to Lose
When you’re sure you’ve got a hot, legitimate tip, it’s always tempting to put all of your money into it. You might dip into your savings or your retirement fund because you’re so sure you’ll double or even triple your investment. Even expert investors will tell you to reconsider this temptation. You should never invest more money than you can safely afford to lose. If you’ve ever gone to Vegas with just cash in your pocket, because you know that’s the amount you’re comfortable with, you understand why you should treat investments the same way.
Scout Out Your Own Strategy
Every investor has his or her own strategy. If you plan to do this for the long haul, you have to develop a strategy that makes you comfortable and confident. For instance, you might prefer penny investments or stocks. Whatever you pick, however, you need to stick with it. Constantly jumping from one strategy to the next greatly increases your risks, plus it makes you look like a fickle investor, and that is not the reputation you want. Don’t turn into a market timer, because that can very easily lead to your downfall—and the loss of all your money.
Keep Your Eye on the Prize
Even if you have a money manager or an investment expert working with you, it’s crucial for you to keep an eye on your own investments. Familiarize yourself with the history and behavior of the stocks in which you are most interested. Thoroughly research any banks or companies that catch your eye. Observe the market’s movements every day, but don’t stress about every increase or decrease. Just make sure that you always know what’s going on with your portfolio by reviewing it annually or bi-annually. That way you can also catch problems or make changes quickly to protect your money.
With practice and knowledge, your investments will thrive, grow, and increase your earnings—but that know-how is necessary. Have you ever taken a particularly big hit or enjoyed a large win?
