Saving money in the bank has lost its beauty because other than the safety it offers, banks offer low to zero interest rates for savings accounts. No matter how much money you put in the bank, you cannot earn as many returns as investments will offer.
One investment with very attractive returns is the stock market. However, fear keeps many people from getting involved. Some others enter and record losses, making them sell out at the bottom.
If you want to navigate the stock market and get a hang of investing successfully, follow the tips below and you will be on your way to financial freedom.
Table of Contents
Conduct Research
If you’re not an expert at trading stocks, conduct research from platforms, groups, and apps that offer the knowledge and analysis you need.
Marathon Investing and Trading is one of such groups that provide knowledge for successful long-term investments. You can also chat with other people in the group while figuring out companies and their investment strategies.
Although a company’s past success doesn’t vouch for its future, it’s a great idea to invest in a unit trust or mutual fund that has remained strong in the past two years, alongside affordable management fees.
Diversify when Investing
One safe way to manage your risks is to invest in several stocks across several markets. Invest in different bonds and mutual funds, commodity, property, and hedge funds.
You can also invest across countries and continents where there are emerging markets and ensure that no single investment holds over 10% of your overall investment portfolio so that you can cope with a possible loss in one angle.
Know when to cut your Losses and keep the Winners
Throughout your investment periods, you will find successful investments when you compare them to the market index. You will also find those that don’t succeed.
When a stock is underperforming, don’t hold onto false hope that it will improve, and never buy more stocks at that low price. It is safer to cut your losses early than lose everything later.
When your investments are doing well, retain them for the long run and watch them bring compound interest.
Plug-in your Dividends
Instead of depending on appreciating stock value, achieve more growth by reinvesting your dividends because it amounts to high returns over time. When doing this, ensure you are working with investments that are known to have a good story of dividends in investments.
Walk the less-threaded Path
Buy new stocks when the stock market is low and sell your bad-performance stocks when the stock market is high. Channel the funds into other profitable investments.
You’re in for the Long Run
If you are in this for the long term, avoid trading frequently because the trades could affect your commission, which is not great for your walk towards making compound interest.
Be sensible about diversifying and make brave decisions, even when there is some sudden move or crash in the market.
Don’t be Afraid to Sell
In the end, after building up your funds over the long term, don’t be afraid to sell your stock and get money when you need it. You made the money for yourself and your family, so never be afraid of selling for a good cause and cater to your needs.
