Still, going into the stock market without a plan is a quick way to lose your investment. Here are a few basic tips that should help you make the most of your investing experience.
What Are Your Goals?
You wouldn’t get into your car and leave your house without having at least some idea of a destination in mind, so why would you do the same with your investments? Knowing what you want to get out of the stock market is crucial, both to helping you get there and helping you get out when you do arrive.
You need to take your time to define your investment plan. During the process, which might take as long as you need, you should consider consulting other accurate information sources to contrast your inferences. A good example of it is this Andrew Keene project 303 review.
For most investors, the opportunity to save for the future is at the top of their priority lists. Whether that is for retirement, education, or simply a down payment on a house, these investors want to protect their money and grow it at least as fast as inflation.
On the other hand, there are plenty of investors who want to make money as quickly as possible. They may not be as concerned about losing their initial investment, so they are definitely more willing to take a chance.
Growth vs. Security
Stocks are incredibly volatile at even the best of times, so it is important to know how much you want to play with in the market at a given time. In the past, many have recommended that you should keep a percentage of total investments equivalent to your age in bonds and other lower-risk investments, and leave the remaining portion in the stock market.
That may or may not be the best solution for you, but as a general rule, keep in mind that as risk increases, so too does the opportunity for reward.
Diversify
No matter how risky of an appetite you have for your investments, it is imperative that you diversify. While tech and health stocks may have impressive gains, they too are vulnerable to the same market forces that act on less flashy securities. Again, if you’re looking to ‘play’ the market, this may not apply to you as much. However, if you’re investing your life savings, you don’t want one company’s bad decision to destroy what you’ve built over years.
Consider International Options
Once largely inaccessible to the typical retail investor, international options are a great way to add considerable diversity to your account. Just as the NASDAQ and NYSE are different markets, so too are their markets in London, Tokyo, and Hong Kong, among many others. In fact, there are dozens.
If you’re new to investing internationally, it is probably worthwhile to focus on ETFs and other consolidated options that simplify the process for you, while also helping to keep complexities like international banking and currency exchanges to a minimum.
Don’t Fall for Everything You Hear
Late night telemarketers, spammy emails, and obnoxious neighbors will all claim to have the hottest stock tips. For the most part, these are best avoided. After all, they have nothing to lose, and in many cases may have something to gain. This is especially true on so-called penny stocks, where even a modest investment can result in someone getting a big commission or a hefty enough increase in their own shares’ price so as to allow them to abandon a bad position.
Even if the advice in question comes from a talking head on a major financial news show, still take it with a grain of salt. After all, they may still well have an interest in the position, and even if they don’t, the hundreds of thousands of other viewers watching may obliterate any perceived advantage.
Don’t Forget Free Money
To end on a happier note, don’t forget that many companies offer matching for 401k or IRA accounts. This can be an opportunity to double your investment. A failure to take up this offering is essentially leaving money on the table that your employer is happy to give you, and in most cases, investing this way has definite tax advantages. Talk to your HR department to learn more.
Conclusion
More than ever, as the business environment proves to be cautiously optimistic going into 2021, it pays to have a plan when it comes to the stock market. Still, by focusing on knowing your acceptable risk levels with a goal in sight, avoiding risky investments, and taking advantage of offered opportunities at work, you’ve got the potential to set the foundation for years of wise choices.
