Making investments should now be seen as a necessity than just an option. Who wouldn’t want his money to grow in value so he can lead a comfortable life unaffected by inflation? As investing is not a choice anymore, people tend to dive into the pool of riskier investments such as stocks with the hope of making it big in a stride. Most fail, as luck does not favor the brave in the financial world. If you act brave, it’s quite evident that you are taking higher risks, and losses can come your way just too soon.
So, all you foolish investors out there, here are few investment insights which can give foresight to your blind eyes and guide your vulnerable minds, and then even you will make money when the time is right. When, where and how much is for you to decide, so don’t let a wrong advice destroy your financial might. And now for your hindsight let’s learn how to invest right?
Get the discipline right. Never catch a failing knife and always place a stop loss within your risk flight. It’s smarter to take a loss while it’s still bearable, say ranging between 5%-10%. Stock markets can get irrationally volatile and you would know that if you’ve seen what happened during the recent recession. Taking a smaller loss is better than watching your investments shrinking to the size of a piggy bank. Preserving capital is the only way to stay in business no-matter how rough the ride gets.
- If you already own a blue chip and riding on profits for a while, then do not sell it even if it decides to slender before it can again kick-start the up-hill ride
- If you are new to investing, let me tell you that finding value in low quality stocks is a sheer suicide.
- Follow a predefined approach with set rules, so that tempt and fear never put you to grind.
- You sold Apple when it was $5, it took off and $500 is very much in sight, you shouldn’t hesitate to buy as it still has some juice left in that bite. The idea is to keep your emotions out and take a fresh look every time and don’t compare the price as the story is different every time.
- Don’t strive for quick profits when you can thrive on long accumulated wealth, just recall these insights and learn to take baby steps right. Stock market investments better reward long term investors who have the patience and zeal to plant seeds and nurture them till the fruit is ripe.
- Don’t try to shoot the moon. Venturing into stock market without clear objectives and an investment plan is a gamble where stakes are higher than what you can win.
- So how do you pick your seeds? Chasing smart money is a good idea and you can do so by occasionally checking out what some of the top rated funds are growing in their farm. Never look at what your neighbor is growing in his backyard.
- Volatile phases are the testing times, so don’t panic, these can be seen as portfolio churning opportunities for buying future gold mines which are being battered in choppy times. And, holding some cash as a part in your portfolio is the key to unlock these mines.
- Whatever you do, never bet on a single stock and don’t go the other way of diversifying way too much. Restrict your exposure to top 5 industries and then pick top two companies from each industry.
- Greed is a short way to grave. These days most brokers allow margin trading to their clients and utilizing this freedom to leverage has way too much risk. Such instruments should be avoided at the first place, and only sophisticated traders with the capability to deal with leveraged risks should get their hands dirty with borrowed money.
I hope, these investment insights make sense to each one of you, “foolish” and the rest.