Secrets to Successful Investing –
As you begin to collect your first paycheck you may want to start planning to save money for a rainy day and even start thinking about investing. But investment to you may be a big word. It is full of jargons that you may not understand.
There are a lot of investments instruments out there; basically it means you can invest in different things. What are they? These can range from the usual stocks, mutual funds (unit trusts in some countries), properties, gold, commodities, to highly niche ones like art and wine.
But regardless of your instruments of choice, these are the basics secrets to successful investing:
1. Have A Purpose
No matter what you do, you must have an objective. Investing is no different. What is your objective for investing? Is it to grow your money quickly so you can retire? Is it to grow your money to hedge against inflation? Or is it to invest so that one day you can buy that dream house? Have an objective in mind.
2. Investment Time Horizon
Know how long you want to stay invested before you stop or enjoy the fruits of return after having invested in the time period you have decided. For example, if you are now 25 years old and plan to retire when you are 60 years old, you may for this purpose have a investment time horizon of 35 years. Investment time horizon varies between people and is aligned to your objectives.
3. Risk Tolerance
The third of the secrets to successful investing is understanding your risk appetite. This simply means what sort of risk you can tolerate. If you are someone who can take a lot of risks, the products you invest in can be very volatile. These sorts of investments can bring in a lot of returns but is also very risky. Ask yourself, are you a conservative, moderate or an aggressive investor? How much risk you can take determines where you should put your money.
4. Stay Invested
Most investments are long term. Well, at least if you take the term investments in a very conservative sense. Think long term when you are investing, you may want to learn about dollar cost averaging which is a strategy in investing. Many successful investors use this strategy to make money as they do not worry about timing the market. You cannot dump a certain amount of money into investments and say, “Ok, that’s it.” Investments works best when you invest in the long term.
Who doesn’t want money quickly? We all do. But investing as mentioned previously is a long term activity. You need time to see your returns or at least good returns. Have the patience to see your investments come to fruition.
Plans, goals and priority change with time and any secrets to successful investing will tell you that you need to review your investments objectives and returns from time to time. This is because things change. You may be single now, but when you get married your investment strategy may change as well.
These are the six secrets to successful investing. They are very basic but it is the basic that you can start with to find out more. The more you educate yourself the better your financial literacy. That will help you manage your hard earned money better for your future.
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