Every investor has goals and big ideas when it comes to their investments, yet often these goals are not reached which can be frustrating particularly when you are patient and it seemed like a smart move at the time. While there will always be an element of risk and unpredictability when it comes to investing, there are also a few sure-fire ways to improve your abilities as an investor which could enable you to go on and reach your financial goals. This could have a huge impact on your entire life and enable you to enjoy making investments so read on for a few tips.
Reestablish Your Goals
First, you need to take an honest look at your financial goals and determine whether or not they are realistic. Every investor needs a plan and end goal, but this also needs to be something that is realistic so that you have the motivation to invest and make the right moves.
While there is risk and unpredictability, you can greatly reduce this with thorough research before making any decisions. There are endless resources online which can help you to identify good opportunities and make the right moves, but you also need to research into a business before you invest. You also need to have a solid foundation of knowledge related to the stock market, finances and the economy and there are many excellent books that will be able to help you with this.
Understanding Your Investments
Following on from this, you need to fully understand what you are investing in as otherwise you will be taking a huge risk. You need to easily be able to explain what the industry is, how they can succeed in the industry and how the business makes money. People often blindly invest in something, like cryptocurrency, without having any idea of how it works and this is dangerous.
Stop Following The Crowd
Similarly, avoid following the herd when it comes to investment opportunities as by the time a crowd has formed it is often too late. Additionally, just because an investment has worked previously does not mean that it will in the future so take any recommendations with a pinch of salt.
Listen To Experts
It is worth listening to experts as they can help you to identify profitable investment opportunities which you may have been unaware of. As an example, shale oil is currently an industry which is starting to become popular and it is being recommended by many experts. You can use these experts to identify the best shale oil investments around and achieve your financial goals.
The great investors remain emotionless and unattached to their investments. When you make decisions based on emotion you are not using logic which is vital to success when it comes to investing. Many new investors are finding it helpful to use a Robo-advisor to determine investment opportunities as this works on a complex algorithm without any emotion attached involved.
Avoid Over Handling Money
There is a popular saying in investing which goes “your money is like soap – the more you handle it, the less you have”. This is because when you move your money there will be transaction costs and often tax consequences which can be costly. Only move your money when you need to and avoid making snap judgements.
Every investor knows that you should diversify your portfolio yet it is not practiced by many investors. Diversification greatly reduces risk as you are not putting all of your eggs in one basket and you should always have investments that are performing well even if some are not. You may not get the meteoric rises that you (could) get with single investments but it should provide some stability.
It can be frustrating when your investments are not working out, but patience is vital and something that every successful investor will have in buckets. Slow and steady wins the race so try not to make snap decisions for more stable and reliable returns. Although you need to be patient and allow your investments time to grow, it is also important that you know when to cut your losses when stocks start to fall or if they have plateaued.
Utilize Dollar-Cost Averaging
If you are struggling with your investments then a good strategy to adopt is dollar-cost averaging. This involves investing a regular set amount periodically (quarterly, monthly etc) with the intention of stopping harmful behavioral inclinations. This should result in purchasing more when prices are low and fewer shares when prices are low.
Regularly Review Your Portfolio
You should regularly review your portfolio in order to keep a close eye on each investment so that you can make intelligent and timely decisions. Although important to regularly review your portfolio , it is also important not to obsess over it as this will lead to emotional decisions based on small fluctuations.
Look After Yourself
In a similar vein, you also need to make sure that you look after yourself and do not spend too much time thinking about your investments. You need to have a life away from this with other hobbies, socializing, eating a healthy diet, exercise and enjoying yourself. Many people completely immerse themselves in the world of investing which is unhealthy and will not necessarily make you a smarter or more successful investor.
Follow these tips to become a better investor and to make more intelligent decisions. People often make the same mistakes when it comes to investing or they have bad practices which can stop them from maximizing profits and making rash decisions. A great investor will mitigate risk with careful research, patience and removing emotion. You need to view investing as a way to steadily build wealth over a long period of time and avoid viewing it as a way to get rich quickly. This is the key to success and achieving your financial goals yet many people hear stories of people making vast sums very quickly which is extremely rare.