A well-thought-out investment strategy
Some of the most common investment strategies include growth investment, value investment, and technical analysis. While some investors would stick with one strategy they feel comfortable with, others may combine different strategies to get the best results. You should know why you are investing in a stock lot before purchasing it. If you want a great investment strategy without a lot of work involved in the process, talk to the UK Individual Shareholders Society.
The right amount of risk
Buying stocks always involves a risk. In fact, not every stock will present equal risks. Usually, the higher the market capitalization (price per share into the number of shares outstanding), the lower the risk involved in purchasing the stock. You should have an idea of the risk you are willing to take and avoid over-exposure.
Be patient – time is your friend
Stocks are a valuable investment over the long term due to their very good returns. Stocks are up on average about 7.5% over the past 100 years. In fact, Peter Lynch says that some of his best-performing stocks are the stocks that he held for at least 5-8 years.
No guarantees
Despite what stock gurus might tell you, there are no guarantees when it comes to investing in stocks. Investing in stocks is quite uncertain and risky. That is why you are rewarded accordingly.
Past performance of a stock lot doesn’t forecast the future
Do you know why a disclaimer is included in every bit of investment advice? That is because the past performance of a stock lot doesn’t forecast the future. Although you can get a great deal of insight into the probability of how a stock lot will behave by studying its history, it won’t help forecast future events.
Diversify and diversify more and more
Diversification is the name of the game when you are investing in stocks. Make sure you diversify by geography, industry, and by asset class when investing.
Don’t stop learning
Learn everything you can about the basics of investing in stocks. You can use online resources to understand the industry. When it comes to purchasing stocks, knowledge is power.
Be a contrarian
There are times when the masses are wrong. Fortunes are actually made by understanding when to follow the crowd and when to go it alone.
Don’t be the guy who brags
You may already know the guy who brags about his massive gains but never talks about his losses. Most of the time, stock investment is like playing poker. Hold the cards tight and keep your mouth shut.
