How Not To Lose Your Shirt Investing In Stocks
Investing has always been seen as the goose that lays golden eggs; what most people should know is this so called golden goose is not as stable as most people think.
Other people also see the financial advice industry (financial planners, portfolio and hedge fund managers mostly) as unnecessary and sometimes blame them for the financial downturn.
Whatever the perception of the people in the financial sector is, one thing is clear; investing can be both the best
and worst decision you can make about your financial life.
Here are a few things to help make your investing decision as less risky and more beneficial.
- Only invest money that you can afford to lose. Investing is not gambling. In fact, even for gambling investing money that is supposed to be used for necessities is a no go. This will lead to too much anxiety and may make people make more emotionally-driven decisions.
For starters, invest in companies that are listed in exchanges and are blue chip companies. By being listed, these companies can assure shareholders that they are regulated and that there is a ready buyer or seller of the said share in the exchange.
Blue chips are companies that are known for their ability to be profitable in good and bad times. Generally, the older and more known the company, the greater the chance that it is a blue chip. However, not all blue chips are created equal; some will have lower stock prices than others while some are already too expensive.
Invest for long-term and research well. This would be the most useful advice anyone will hear from any serious investor. Know if you are a trader or an investor first. Traders “play” the markets every day; they need Bloomberg terminals or large monitors to track every change of a stock price. A single move in cents can spell profit or loss to them.
On the other hand, investors will know about fundamental and technical analysis, mportant financial data like the Price to Earnings ratio and the EBITDA, and maybe glance at the charts perhaps once a day at most.
In conclusion, starting slow and steady will put you heads above other market players in the financial world.
Knowing important information is key and never let your emotions make a financial decision, be it for investing or just shopping.