Of course you want to make as much money as possible with minimal effort. The stock market seems like such a daunting entity where only a few lucky individuals profit from. The key is to keep yourself informed and make slight adjustments to your portfolio with the help of a financial advisor. Your investments should be set up to help you pursue your financial goals. We are going to discuss some top tips on how to get the most out of your investments, market willing.
Comfort in uncertainty
Dealing with uncertainty can be a scary concept to grasp. Not knowing what the future brings whether it be wins, breaking even, or loss is a huge unknown for many. The stock market can be extremely volatile and unpredictable but that’s the beauty of it. One day, your stocks could be doing horrible and the next, they could double in price. Short term investments are suitable if you heavily monitor the stocks; these are investments that you expect to cash in within the span of 3-12 months.
Most individuals engage in long-term investments which are investments that accumulate over years or even decades. This type of strategy is more comforting because there is a lengthy time, 1 year and beyond, for the investment to accumulate wealth or recover from a loss. There is also more time to grow with long-term investments which can potentially bring in more financial gain.
Accept potential loss
Accepting the fact that you could lose all of the money in the investment often restricts people from diving into the stock market. Here’s my piece of advice for you, only invest what you are willing to lose. If you cannot afford to lose the money you are putting in the investment vehicle, you should not invest it. To avoid investing more than you can, you may consider setting up a payment plan to invest a small portion of your paycheck that you can live without. If you cannot afford to lose even a small portion of your paycheck, you might want to consider starting off with a high interest savings account, bond, or CD fund. Although you will earn a small interest these vehicles, they have less risk involved. These options are great for starting out until you can build up enough savings to invest in a riskier platform.
Do not time the market
The stock market is unpredictable. Even experts with decades of experience cannot predict the market prices. It is inevitable that if you are investing long-term, you will experience the highs and lows of the markets. One strategy that works in many investors’ favors is despite the market pricing, continue to invest the same amount of your paycheck every month.
You could miss an opportunity for a really great investment or the complete opposite where you initially lose money if you attempt to time the markets. For example, I tried timing the markets and thought a specific stock was going to continue to increase because historically, it had. In two months, this stock went from around $22 a share to $51 so I immediately jumped on it thinking it would continue to rise. I was very wrong. Although long-term projections for this stock may be positive, almost immediately, the stock dropped to $40. Lesson learned: do not try to time the stock market because you never know what could happen. This is a stock that I will be holding onto for a while but all in all, I only invested what I could afford to lose. If I make some money, great but it is not the end of the world if I lose the money I put into the investment.
To carry over from the market timing section, establishing an automatic payment plan will force you to allocate a portion of your paycheck to investments. Many investment firms offer automatic payment services where it automatically draws money from your bank account and invests the funds the same day. This prevents you from holding back on an investment purchase and can potentially increase your investment value.
Stay informed and be aware
Although you might have a financial planner managing your investments because you don’t have time to keep up with the market and investment options, staying broadly informed about the markets is a good tactic. Knowing what you are getting yourself into with your hard-earned money is extremely important due to the fact that you have a clear understanding of the investments and are not confused.
Keeping up with the market trends can be beneficial because it can give you new investment ideas that can potentially result in big earnings!
Subscribing to reputable magazines, radio stations, tv stations, and online forums are great ways to receive accurate information regarding the markets. Please ensure that they are credible sources. Even reading or listening to ten minutes of investment knowledge a day can be the difference between a good investment portfolio and an excellent one.
Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.
Stock investing involves risk including loss of principal.