|
|
Ways To Keep From Making Idiotic Investing Mistakes
Smart individuals sometimes make silly mistakes in terms of investing. Part of the reason for this, I guess, is that many people don't have the time to learn what they really need to know to make good decisions.
Do not Forget to Diversify
The average stock market return is 10 percent or so, but to earn 10 percent you need to own a broad range of stocks. In other words, you need to diversify.
To make money on the stock market, you'll need around 15 to 20 stocks in a variety of industries. (I didn't just make up these figures; the 15 to 20 number comes from a statistical calculation that several upper-division and graduate finance textbooks explain.)
Have Patience
It is important for investors to have patience. There will be many bad years. Many times, one bad year is followed by another bad year. But over time, the great years outnumber the bad.
They compensate for the awful years too. Patient investors who stay in the market in both the good and bad years nearly always do better than people that try to follow every fad or invest in last year's hot stock.
Invest Regularly
You may already know about dollar-average investing. Rather than purchasing a set number of shares at regular intervals, you buy a regular dollar amount, such as $100. If the share price is $10, you purchase ten shares. If the share price is $20, you purchase five shares. If the share price is $5, you acquire twenty shares.
To make dollar-average investing work with individual stocks, you might want to dollar-average each stock. In other words, if you're buying stock in IBM, you have to purchase a set dollar amount of IBM stock every month, each quarter, or whatever.
Do not Ignore Investment Expenses
Investment expenses can add up quickly. Small differences in expense ratios, expensive investment newsletter subscriptions, online financial services (including Quicken Quotes!), and income taxes can easily subtract tens of thousands of dollars from your net worth over a lifetime of investing.
Investment expenses can add up to really big numbers when you realize that you simply could have invested the money and earned interest and dividends for years.
Do not Get Greedy
People make all sorts of foolish investment decisions when they get greedy and pursue returns that are out of line with the average annual returns of the stock market.
If a person tells you that he has a sure-thing investment or investment technique that pays, say, 15 percent, don't believe it. And, for Pete's sake, don't buy investments on a shell company or investment assistance from that person.
Do Not Get Fancy
For years now, I've made the better part of my living by analyzing complex investments. Nevertheless, I think that it makes most sense for investors to stick with very simple investments: mutual funds, individual shares, government and corporate bonds, and so on.
To add to these simple investments, ask an investment expert about merge companies and financial mergers.
Exactly How Will You Generate Loads From Your Savings In 2012?
If you have some money sitting in a bank account then you already know that you aren't going to make a fortune from leaving it sitting there.. Bank accounts now offer so little interest that your money just won't grow at all when you leave it there.
Global Investment Tips: It All Makes Sense
Of the world's 40000 publicly traded companies, 77 percent are located abroad, a pretty good sign that there are compelling investment prospects outside the United States.
How Can I Make Investments In A Brand New Company?
Let's be honest, many of us would like to one day starting up and successfully operating our own small business so we can leave our miserable jobs behind to become our own bosses.
The Holy Grail Of Capital Markets: Try Strategies That Will Never Ever Fail
A number of people believe in it, others don't and many have maintained that such a technique or system doesn't exist or is simply impossible.
Renewable Energy Investments: Preserve The Planet And Profit From It
The oil market is not the only one looking up, alternative fuel stocks are also attracting many investors. Check out this article.
Numerous Foreign Exchange Managed Accounts Require A Substantial Minimum Advance Payment
Forex trading requires a lengthy time to learn and for you to become consistently effective. With all of the free information regarding forex on the web, one can definitely collect an incredible deal of facts regarding different ways to trade the currency market.
Would We Make Money Through Investing In Gold And Silver Coins?
Many investors are always chasing "the next big thing". The difficulty in investing lies in the volatility of so many markets.
|
More Articles
Blogroll
|
