Investment Rules to Excelling Result
If you are a young person aiming to grow your financial life, you must have heard about investing in stocks. Stocks is one of the best ways to invest, amidst the numerous investment methods, and while a lot of people are making so much money investing in stocks, so many people are losing their hard earn money in the stock market. In this post, I will be looking into how not to lose your money when you invest in the stock market, so I will be telling you what to do and not to.
One thing you need to bear in your mind when investing in anything at all, is that you are not supposed to lose money. Your money is precious, and when you go into the investment world looking to lose money, then you already failed in that investment already. Warren Buffet has said it severally that you should not lose money at all when investing, and it should be your rule number one, and the second rule should be never to forget rule number one. Your very point of investing is to make money and to do so, you need to evaluate your chances, making sure that you do not lose money at all. If the investment has lots of risks, then do not get involved. Ensure that your rewards are worth more than your risks.
Never invest all you have at once. You are to start small and grow your investment. You are to start small and grow your investment by thinking big. You do not know the risk involved practically, so it is advisable that you use the snowball technique to get your investment bigger. You are to start small so you can test the waters. Starting big means risking it all and that is not a good way to invest in stocks.
Never invest in stocks whose business you do not understand. Invest in businesses that you understand. It will be said that you can only invest in business that you know something about, investing in business you know nothing about is a big mistake and should be avoided at all cost. It is good for you to know that you are not investing in stocks, rather you are investing in the company. You should invest in businesses that you understand that models as well as their finance.
Investing involves discipline. You cannot trade, or invest without discipline. Setting a stop-loss, and take-profit can be very tricky when it comes to prices going upwards or downwards. Deciding to shift the Stop-loss, or Take-profit is a bad idea when trading and should never be done. Stick to your strategy.
Never invest your entire cash, always invest money you can lose. Instead of losing your money to trade, it is better to lose your excess cash. You should not lose all you have in a trade, else you will be left with nothing to trade in the future.
Either you are investing in stocks or in cryptocurrency, it is very good to diversify. You should diversify your portfolio so you do not have to face the disaster that comes from trading only one market. Also, it is very good to invest for the long term. When you are doing it for the short term, you are guessing but when it is for a long term, it is very certain that you will be making profit. The S&P500 has a 10%APY.
On a final note, it is good that you learn from your mistake. There is no way you will be investing and wouldn’t make mistakes. While mistakes are inevitable, one thing that can be done from those mistakes is to learn from them. Remember, that investing isn’t gambling and shouldn’t be treated as such.
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