Investing your money and securing your financial future for you and your family is a great responsibility that needs to be taken seriously. You work hard for your money, and you want your investments to grow as consistently as possible. But the stock market is not exactly known for its consistency, at least in the short term, and it can be very unpredictable at times. Even the pros get it wrong from time to time. If you're ready to up your investment game but are still unsure how to proceed, here are five investment tips that will help you figure out what steps to take next.
1. Invest Early And Don't Stop
The most common investing mistake people make is that they simply don't start investing early on in life, especially when it comes to investing for retirement. By putting off retirement investing, you are leaving a lot of money on the table and drastically reducing the returns that will come during your retirement years.
It's understandable that investing during your younger years doesn't seem all that important, but the best investing advice anyone can give you is to simply start now. Go on. Get started. Do it now. You'll be glad you did. Once you've gotten into the routine of making those monthly investments, your best course of action is to just keep investing. Are your stocks going up? Great! Buy some more. Did one of them experience a sudden drop in value? Fantastic! Now they're on sale! Buy some more.
Pick your stocks carefully. And when you have a solid company that is expected to stand the test of time, then just keep investing through the ups and downs.
2. Be Realistic About Managing Your Portfolio Yourself
With the flood of investment information out there online and in book stores, combine with the low cost and availability of professional investment tools available today, more and more people are taking their investments into their own hands and managing their own portfolios. This can be a great opportunity for savvy investors to exercise greater control over their investments – plus, it can be a lot of fun.
But before you run out and start purchasing individual stocks and funds on your own, be sure you have the desire, time, knowledge and temperament required to responsibly manage your nest egg. A lot of armchair investors have taken huge losses because they either didn't know what they were doing, or because they simply weren't keeping a watchful eye on the markets and missed crucial opportunities to either grow their investments or to cut their losses.
Take your investments seriously, or hire someone else to take them seriously for you.
3. Keep Investments In Perspective
As you consider your investment strategy, it's important to keep things in perspective and look at the big picture too. Your monthly investment commitment also needs to take into account fluctuations in income and expenses that take place at various times of the year and under special circumstances.
Responsible capital management on a personal level will have you keeping your eye on your cash flow and making adjustments to your investing strategy so that you don't end up overcommitted to your portfolio and running out of liquid capital in the short term.
4. Don't Let Fees And Commissions Eat Up Your Gains
Whether you decide to hire an investment manager to guide your investments or you decide to tackle them all yourself using online trading platforms, you need to be mindful of the fees involved and the commissions that are taken out. There are going to be fees whenever you decide to buy or sell a stock, and there are going to be fee cycles spaced out monthly, quarterly or annually, even when no changes to your portfolio are made.
Those fees can get add up quickly, especially if you are an active trader who buys and sells with every little fluctuation the market throws at you.
5. Don't Make Emotional Investing Decisions
With those fees in mind, it's important to point out this critical rule of investment: don't make your buying and selling decisions based on emotions. If you're the kind of investor who will freak out and sell it all whenever a stock takes a dip, you stand to lose a lot of money and might not be cut out for portfolio self-management. The wise investor will have the self-discipline to stay the course when long-term investments hit some rough times but will also have their exit strategy planned out ahead of time.
You can't make decisions on the fly and still expect to come anywhere close to beating the market. This is where making an investment in your own financial knowledge can play dividends. The more knowledgeable you are about investing in general and about your companies in particular, the better prepared you will be to make wise choices with your entrance and exit strategies.
Investing can be a crazy roller coaster ride. Everyone dreams of making gains all the time and coming out the other side with mountains of capital, but the reality is that it takes a great deal of knowledge, discipline and patience to be successful with a portfolio. There are pros and cons to managing your own investments, just as there are pros and cons to hiring an investment manager. As will all things financial, you must count the cost before committing your money to any investment.