Even if you’re not a professional investor, you can behave like one by following the same strategies that the most successful investors use. They swear by these tactics, and given the size and breadth of their portfolios, they’re right to do so. Just understand that there are risks involved, and you will have to put your money in someone else’s hands.
Admit You Need Help Early On
Even the professionals had to start somewhere. If you’re relatively new to the investment game, you might feel the need to prove yourself. That’s understandable, but don’t decide to go it alone. That’s the best way to lose every penny of your investment stake. Instead, find a financial advisor or a money manager. Seek out the services and advice of someone like Ken Fisher, research the trade, read books, and accept expert help. It’s better to place your money in the hands of someone who knows what to do with it than to lose it all through hubris.
Pay Attention to the Economy
Seasoned investors know the importance of considering the economy before making a single move in the market. In addition to studying the general ups and downs of the economy, you should also pay attention to statistics such as going unemployment rates, consumer behaviors, and job reports. See where money travels as well, and which job industries are strongest in any given quarter. Don’t simply look at what’s going on in the United States, either. Turn your attention overseas, to emerging and long-standing markets. These are all good indicators of where you should invest your money.
Diversity Rules the Roost
Don’t make the mistake of putting all of your eggs in one basket, a cliché that is daily proven true in investing. If you put all of your money into one sector, you don’t really have any room to grow. While it’s smart to put your money in a stable place, such as an IRA, don’t run away from riskier investments, such as choosing stocks. As long as you choose reputable companies with strong, stable histories, your money will grow. The key is not to fall into the trap of investing everything in hot tips that don’t make you confident.
Allocate Parts of Your Portfolio
On the subject of risks, professional investors agree that allocation is as rewarding as diversification. Choose a stable investment, something that is as close to a sure thing as you can get. Leave it alone, let the money there grow. Allocate another part of your portfolio to playing. This is where you can feel free to take risks. You will sometimes have to balance even your allocated stock to make up for any major losses or gains, but if you get a hunch or a sound tip, you can follow it to its conclusion with confidence.
Seasoned investors didn’t start out that way, they began their investment careers just like you; they started at the bottom and worked their way to the top. What’s the best advice you ever received from an expert investor?