Are you a Wise Investor?
Investing for the future is a task that is best started as early in your career as possible. Although a novice investor cannot aim at duplicating the success of a market savvy investment guru, it is not an impossible task for such investors to make money in the markets. What it requires is some basic knowledge about how investing works, options you can invest in and safeguards you should establish to keep your investments safe. Here a few points to keep in mind if you are a new investor.
Avoid ‘get rich quick’ tips
No one can predict the market with perfect accuracy. Never base your investments on ‘sure winners’ recommended by brokers, friends or acquaintances. The savvy investors who have made a killing in the markets have based their investments on research and personal judgment. Invest only as much cash as you are willing to write off in such ‘sure fire’ high risk channels.
Know when to stop
Getting greedy for more is a sure recipe for disaster in investing. Set your upper limits for each investment and pull out of the investment when it reaches this mark unless you can see some clear and visible evidence of further growth. Increasing exposure to a soaring investment, hoping that it will never hit a ceiling price is unrealistic. Remember that whatever goes up must necessarily come down too.
Know more about investing
Learn more about investing and how to protect your portfolio before you invest even a single dollar. Read articles written by market analysts about the current and expected trends in the economy. Even if you are not a financial whiz, you can easily gain a basic understanding about safe investment avenues from the many discussions and articles available on the internet.
The importance of diversification
Diversify your portfolio to ensure that you have the perfect risk-return balance in your portfolio. Maintain a good balance between bonds, equity, mutual funds and government backed instruments so that your portfolio has the right mix of safety and high returns.
When diversifying your portfolio, make sure to keep your long term goals as well as predictions for the economy in mind. In volatile markets it is best to invest in safe instruments like bonds whereas in a market that is expected to boom, equities are a good investment.
Always set aside a specific sum as risk capital to carry out your investing. When you do so, make sure that you are able to meet basic expenses comfortably as well. Avoid investing large chunks of cash from your savings. Start with smaller amounts and once you gain enough experience, you can invest bigger amounts. Remember that no matter how careful you are and how much research you do, there are still no guarantees about the returns you can earn on your investments.