If you’re brand-new to investing and possibly just starting to do your online research, good for you! One of the best things that you can do if you’re just getting into investing is teach yourself first, before you start risking any of your hard-earned money.
Today’s blog looks at 5 Tips that will get you started on the right foot, with basic but important information that you need to keep in mind so that the investments you make are sound and will pay off. Enjoy.
1) KISS. This is an acronym for Keep It Simple, Stupid. Many beginner investors focus on either irrelevant points or, even worse, try to predict the unpredictable, something that almost always ends in failure. If you focus on strong companies that have a history of excellent returns, and learn to “tune out” all of the noise that you will hear about which stocks to buy and sell, your odds of success will increase significantly.
2) Don’t expect too much or too little. As a beginner, many consumers believe that stocks will be the key to quick riches. The reality however is that, aside from extreme luck, investing rarely makes any investor a windfall of money. In almost all cases the best returns are achieved by patient investors who have the time to wait for their investments to grow, research the companies that they invested and have the proper expectations of what their returns will be.
3) Prepare yourself to hold on to your stocks for a long time. Here’s a fact that most new investors either don’t know or overlook; in the short run, stocks can be quite volatile, bouncing up and down like a ping-pong ball. If you try to protect what the market will do in the short term, you can literally drive yourself crazy.
In the long run however, stocks have been shown through the decades to be a very good investment choice, with stable and consistent returns. What this means is, as above in number 2, you need to be patient. You also need to focus on the fundamental performance of the company who’s stock you own, knowing that, in time, the market will recognize the best and reward you for your patience.
4) Ignore the market noise. Today there are a ridiculous amount of media outlets competing for your attention as an investor. Most of these talking heads focus on daily price movements in various markets and try to justify why they have gone up or down. The fact is however that it’s extremely rare that daily price change will mean any long-term change in a stock’s value.
The worst thing that you can do is listen too closely to all of this noise and let it control your choices, investment wise. Let’s put it this way; a baseball player never got better by looking at statistics but instead by practicing relentlessly. As an investor the more research you do and the better you know a company whose stocks you own, the more success you’ll have.
5) Act like you own the place. Lastly, remember this one fact; if you own stock you actually are part owner of the company. If you were to buy a business, you would act like a business owner, yes? You would read and analyze financial statements, weigh the strengths and weaknesses of the business and not act impulsively about changes. If you own stocks, you need to be able to do the same thing if you want to be successful.