The stock market is one big Gamble! If you don’t invest your money wisely and by taking proper steps, you may fall and collide
So, here are a Few Tips To Invest Your Money in stocks Wisely
1. Avoid Individual Stocks
It’s simple to get caught up within the hype of an individual stock and lose all of your money. the problem with individual stocks is that you’re risking money on one company. If the company includes a bad quarter or suddenly goes bankrupt, you’ll lose most or all of your investment overnight. This happens more often than you think.
2. Never Invest In Something You Don’t Understand
4. Don’t Be Too Conservative
The opposite of taking too much risk (i.e. individual stocks) is to be too conservative when you invest. Keeping all of your money in an exceeding money market account or CD’s (Certificates of Deposit) is a terrible way to invest your money!
Yes, these investments are very safe, but they have a very low return on investment. The returns are thus low that they don’t even keep up with inflation, so you actually find yourself losing money over time with these lacklustre investments.
5. Seek Wise Counsel- Pay a Professional
It’s always good to seek wise counsel about your investments from a professional such as a financial advisor or financial planner. you must seek out a pro who charges a flat fee or by the hour. Hiring a financial planner that takes a percentage of the money you invest as compensation can place a large dent in your investment returns. Ultimately that will cost you tens of thousands (or more) over the long term.
6. Be Patient With Your Investments
After 20 years of investment, I’m finally starting to learn to be patient with my investments. remember that investment could be a marathon, not a sprint. it’s very normal for the value of your investments to go up and go down over time. but as time stretches on, they’re going to almost always go up in value. so be patient if your investments are not performing very well right now.
Don’t think about your investments in terms of however they are doing today, or the last 6 months, or the last year. think about your investments in time spans of 20-30 years or more. Taking a long-term view helps you keep things in perspective.
7. Watch The Fees
Investment fees will eat you alive if you’re not careful. There are several fees you need to be aware of:
- Transaction Fees- The fee charged every time you buy or sell shares of an investment. These fees are generally pretty low.
- Front End Loads- Some mutual funds charge a fee as high as 5-6% of the total amount invested to purchase shares of that mutual fund.
- Annual Fees- A fee charged every year you own shares of a mutual fund. These investment fees have a really wide range from as very little as .2% up to as high as 5-6%.
- Fees are really insidious. every time you pay an investment fee, that’s money that doesn’t get invested and never has a chance to grow.
Obviously, a lot of investment fees you pay, the more investment growth you give up over the long term.
High fees will literally cost you tens to hundreds of thousands of dollars in investment returns over your lifetime.
8. Keep Your Emotions Out of It
TV shows and the internet like to portray investing as an exciting, fast-moving game of hot stock tips and frequent trading. the reality is that good investing is actually very boring.
It’s almost exciting as watching paint dry.
Don’t check your investments every day. For that matter, don’t check them every week or every month. maybe check them once every quarter.
When you constantly check your investments and see the day to day movements in price, it’s way too easy to get your emotions involved. you end up making bad investment decisions based on an emotional response. Again, I know this from personal experience.
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