Regardless of the type of investment, whether real estate, stocks, bonds, annuities, or something else, there is a learning curve. However, if you want to get involved with investments, there are 10 things in particular that every investor should know. These things will influence the way you approach investments, the decisions you make, and the overall outcome.
Top 10 Tips For Success
1. Never Invest In A Vacuum – When investing, establish specific goals for the future and determine how investing results will have an influence. In other words, goals should be set for a certain age or event, perhaps when you turn 60 or when your children start college. With investing, you have to know where you are going if you want to achieve true success.
2. The Value Of Patience – As an investor, making big money does not come from buying or selling but in being patient. Investing is not a sprint but a marathon with the goal of allowing money to marinate in the chosen market.
3. Asset Allocation – Within investing, asset allocation is the most important, even more so than choosing the right security. Of your total portfolio, asset allocation determines as much as 91% of performance. Sound asset selections are what create a solid framework for portfolio performance long term.
4. Understanding Risks – There are risks, regardless of the type of investing. While the degree of risk might be less if you are extremely conservative, things can always go wrong. Therefore, you have to accept that sometimes you win and sometimes you lose.
5. Taking Risks Pays Off– The higher the level of return being sought, the greater the risk level. However, with experience and well-informed decisions, you will learn which big risks are worth taking.
6. Never Discount Companies – Overlooking boring companies to go after those with pizzazz is a common mistake made by new investors. However, companies that manufacture things like nuts and bolts, dog food, and toothpaste are often the best long-term investments.
7. Investing Duration – Determine the length of time you plan to invest, since this will change the perception of everything you do. Remember, distinct differences should exist between a 10-year and 30-year portfolio.
8. The Right Information – Although you need to stay abreast of investment news, sometimes reading too much complicates matters. Instead, find one or two investment magazines that focus on the type of investing you do and ignore the rest.
9. Investment Limitation – Never put more than 10% of your money into any one individual stock or company stock.
10. Careful Evaluation – Remind yourself that every stock purchased came from another investor who wanted out. Therefore, carefully consider any excessive risk prior to purchasing.