10 investment tips

Adsaff adsadsd By Adsaff adsadsd, 29th Dec 2010 | Follow this author | RSS Feed
Posted in Wikinut>Business>Investment

A list of investment tips that might help you avoid some minor and major errors in the stock market.

10 investment tips

When I started investing I made several minor and major errors that cost me dearly.
Therefore, I will list some tips to avoid these errors. This is for my own part, but also hoping to spare you from making the same mistakes as me.

1. Know yourself. Personally, I think the most important is your own psychology. Many do not understand this until they are left with large losses. Do not buy for more than you're comfortable with losing. If you start to panic and lose sleep if a stock falls a few percent, you bite over too much. Panic will lead to stupid decisions. Therefore it is important to know yourself and have full control over your own feelings.

2. A strategy does not help if you cannot implement it. Therefore it is important to create a strategy that suits you and your psychology. A strategy may seem good in theory but not always in practice. Do not create a strategy based on loaning money if you're not comfortable with this when you put the strategy into practice.

1. It always feels more appropriate and safer to do like everyone else. But do not be fooled. That's how bubbles occur. Do your own background work and not base your purchases on what others do.

2. Always look down before looking up. It is easy to focus on potential profits but be rational and keep a cool head. How big is the potential loss in terms of profits?

3. Always have a cool relationship with gains and losses. Concentrate on investment and strategy. Not the profit.

4. Do not sit too long on the losers. If a share falls from $ 100 to 50 it has a 50% loss but the stock must exceed 100% before you're back at the starting point.

5. Do not buy more shares in a losing stock only to lower the average. Consider the likelihood that it will rise or fall further. Consider also whether there are other companies with greater potential.

6. Do not fall in love with a company. Do not be afraid to sit in a winner and do not hesitate to sell a loser. All too often people sell winners too early to make gains and keep the losers too long in hopes of getting money back. Do not get emotionally involved if one of your stocks are rising rapidly.

7. Avoid by all means fear, hope and greed in the stock market. Or else you might cross the border from investing to gambling faster than you know.

8. Success can often lead to large losses! If you have had a period of great success, it is easy to feel "invincible". This can lead to greater risk and poorer decisions. Remember tip 7 Avoid greed!

9. Losses can often lead to even greater losses. It is quite natural to want to make the lost money back after a period with much loss. This is really dangerous. When the desire is to earn back the loss, we often take much greater risk, poorer decisions and end up losing even more. If you feel that you are severely impacted by the losses, maybe the best is to stay away from the stock market a while.

10. You learn little from easy money and a lot from hard earned money. This is why we have the saying "easy come, easy go!" Have you earned quick money, it's easy to make quick and bad decisions for the future of the money. Do not do this.

PS: Keep a close eye on brokerage costs. The rates might be small. But in the course of a year it can sum up to a big amount of money.

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author avatar TNT_Brian
9th Jan 2011 (#)

Good advice, thanks for posting. I'm won't be at the stage where I'll be investing in the markets for a while. But hopefully some day....

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author avatar Alicia Badilla
9th Sep 2011 (#)

Very cool.

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