Investment Tips for You
Purchasing stocks can feel intimidating and challenging. Especially now during all the commotion about the current financial climate and inflation.
This doesn’t have to be the case if you know some of the best tips and tricks concerning the stock market.
Set Goals
Setting goals is a crucial component of being a successful investor. Setting goals will give you something to work towards. You may want to see enough returns to pay your mortgage or buy that new boat. It helps you set a timeframe for how long you will keep the shares and how much money you must invest monthly.
Avoid Trends
It is popular to purchase shares that are in the limelight. Indeed, you have had that one friend who keeps advising you to buy shares in the same company repeatedly. The company keeps showing up in news articles, and analysts talk frequently about how this is the first time they have seen a share price growth like this.
This is what I call a ticking bomb that will explode eventually. No stock goes up forever, and the people holding their shares too long will lose a lot of money. For example, Gamestop shares had an impressive rally at the beginning of 2021 because investors got upset that hedge funds kept shorting the stock. However, many investors jumped on the bandwagon too late and lost a fortune.
I explicitly avoid purchasing shares based on trends because, in my experience, it all comes tumbling down quickly once the demand to buy shares slows down.
Diversify your Portfolio
When investing, there is no such thing as luck. When someone wins big, they most likely have put much time into analyzing charts and past performance data, or they know something other investors don’t know. Therefore, it is better to have a more diversified portfolio when starting.
Diversification minimizes the risk of a stock worsening the portfolio’s overall performance. It also improves your potential gains significantly. I suggest you buy shares in an index or ETF fund initially because they are already diversified. There is no need to analyze the stocks purchased by the index fund you will buy shares in.
Diversification is more than having at least ten different stocks in your portfolio. It also owns stocks from other sectors because if you own too many similar stocks, they may go in the same direction most of the time. When they tank, they all tank; when they rise, they all grow together.
No Trading
This paragraph is the most important blog post because trading is super dangerous. Avoid trading at all costs!
I don’t care about how many ads you have seen when a trader talks about how much money they have made, how easy people proclaim trading to be, or the number of trading millionaires you see.
Trading is risky without several years of knowledge gained from investing, working for hedge funds, and being a stockbroker. It is not something to be undertaken lightly. The successful traders you see have dedicated years to getting to where they are now. However, that wouldn’t be very good to have in a commercial or isn’t very interesting to talk about, so they elect to display the results of years of hard work and make you believe it only took six weeks.
Beware of free Stocks.
Free stock picks are often just an illusion. When it comes to penny stocks, this is almost always true because agendas are not displayed to investors. The advocates are liars, mostly trying to make as many people purchase worthless stock to increase the price. When the price has reached a certain point, the promoter will start dumping shares, leaving investors with worthless shares while they just hit the jackpot.
Have you ever wondered why their time never costs anything? Most serious brokers or financial advisers send a bill for the time they spent talking to you. However, these brokers never send you an account, and you never have to schedule a time to speak to them. They want to lure you into a false sense of security and then suddenly break all their contact with you as soon as they have made their money.
Don’t listen to your Friends.
Your friends will most likely not be doing well in the stock market because those who are don’t have the time to sit around and talk with you. Their time is valuable, and they don’t allocate time for everybody who wants a piece of advice. Only listen to your friends if they can prove they are doing well with their investments. Otherwise, their picks are as helpful as an elephant in a minefield.