Many of our readers have asked for investment advice and tips over the years and indeed we have given a lot of advice back as well as great tips and other useful information. What we’ve now done is taken all of those tips and put them together in a 4-part blog that should give anyone the tools they need to start investing intelligently. With that in mind would like to present Part 1 of our 4-Part blog series on Investing Tips for the New Investor. We hope that you not only enjoy it but that it gives you the information you need to get started investing on your own and using the stock market to build a healthy, wealthy portfolio. Enjoy.
- Simple is smart. When it comes to investing the new investor would do well to keep things as simple as possible. Don’t trade too often don’t focus on irrelevant data and certainly don’t try to predict the market. If you can focus on companies that are sound, use your common sense and invest with the idea that you’re going to make money in thelong-run (and thus not in the short-run or at least not very often) your odds of success will increase substantially.
- Don’t set your expectations too high. If you’re getting into the stock market because you want to get rich quick then you’d do well to not start at all. The only real way to make quick money in the stock market is to already have a lot of money and also have a good bit of luck on your side. If you don’t have either one of these two necessities (and luck certainly isn’t quantifiable) you’d be better off putting your money in a savings account. That being said, if you go in expecting to make a moderate return over many years then you should do just fine.
- Long term investing is your friend. Stocks can be extremely volatile. That’s a fact that you should definitely get used to. In the short run your stocks may bounce all over the place but, in the long run, if they are constantly paying you dividends and interest then holding on to them will make you look like a genius. Many people make the mistake of dumping a stock because it’s not increasing in value but it’s possible that the business that issued the stocks may still have a sound business plan and just be growing, in which case the stocks will definitely rise in the future. If you can grasp this fact and deal with it without getting too antsy or nervous you’ll do better than the vast majority of investors.
- Pay attention to the market but don’t over analyze. Simply put, there are so many investment media outlets screaming for your attention that trying to listen to all of them is going to make you crazy as well as second guess yourself regularly. While we don’t espouse ignoring them completely what we do recommend is to tune out the noise a bit and focus on things that are more important like the actual performance of the company whose stocks you own.
- Research, research, research. Whatever business that you are looking to buy stocks from make sure that you do your due diligence and research them completely. Take a look at where they started, where they are now and what has happened between those two time periods. The more you know about a specific company the better choices that you can make with your stock investments.
- By your stocks when they are priced low and sell them when they are priced high. As simple as this sounds and as many times as we have heard it said you would be surprised to know how many people simply don’t take this basic advice to heart. With that in mind will say it again; when stocks fall and are low you should buy them and if those that you own have suddenly skyrocketed and are extremely high you should sell. Other than those 2 situations don’t let your greed or your fear cause you to make poor financial decisions.
Those 6 excellent bits of advice should get you started on your investing adventure. We strongly urge you to take them to heart, refer back to them often and use them in every facet of your investing strategy and plan. Of course we also invite you to come back for the remaining three parts and we hope to see you very soon. Best of luck with your investments.