Investing in shares is a lucrative and sensible way to secure your money. Despite its reputation as a risky platform, sensible investors can make a slow and steady fortune. It’s true that Wall Street is strewn with bankrupt investors who made mistakes. Perhaps if they’d read our five golden rules, they’d still have some money left! The stock market is not the place to gamble your money. Casinos exist for that reason, and they’re a lot more fun! Instead, treat investment like long-term savings account. Follow our five golden rules and you’ll make safe and sensible investments.
Diversify, diversify, diversify
Even the safest investors can’t predict the direction of every share. Sometimes a market force can drag down even the most stable companies. With that in mind, never put all your investment eggs in one basket. Spread your money across a wide variety of industries and investment plans. For example, the tech industry has the highest performing shares right now. We’re in a tech boom, but eventually the bubble will burst. If all your shares are in tech, you risk losing a lot of money. Balance the risk with shares in other industries too.
Never, ever invest in something you don’t understand. First of all, learn the ins and outs of the stock market. Use stock market software to watch how share prices react to world events and analyse other factors. Before investing in a company, research the background and accounts of the business. Ensure they have a stable plan for the future. Thorough research is the only way you can make reasoned and well-judged decisions.
Turn down the noise
Most new investors think they need to study financial news like the bible. They’ll have stock market apps on their phone, watch endless financial news and read the paper. They may even frequent investing forums looking for hot tips. The simple truth is this won’t help you in the least. In fact, it could hurt you. By the time the financial news gets hold of information or a tip, everyone knows about it. If you make an investment based on this news, you can bet that thousands of others have too. And guess what that’s going to do to your stock. Yep, it’s going to crash. Focus on your own plan, invest in what you know and don’t be distracted by shiny coins on the news!
Look to the future
The best investors have a long-term strategy. They ride out the dips in the market and hold on to stable shares for a period of decades, not weeks. Many are investing in Yelp stocks and other big market players at the moment. They are a strong name and playing a long-term game themselves. As we said, focus on your own future strategy, stop looking for quick wins.
The market always levels out
No matter how crazy the market might seem, it always follows a general pattern. If there’s a big swing into a bear market (declining), it will eventually swing back into a bull market (climbing). It follows Newton’s third law; for every action, there is an equal and opposite reaction. If a share is down, try not to worry, ride it out and it should level out eventually.
That’s all there is to it, follow investors! If you’ve got any other wise rules, please let us know.