Many entrepreneurs dream of becoming a savvy investor not only for the financial gain, but also for the thrill of smartly jumping on the right investment at the perfect time. While there certainly is an element of luck, there is also a lot that can be learned which will help a first-time investor to make intelligent decisions and earn a profit on their investment. So, if you have always wanted to be a successful investor but you do not know where to start, read on for a few helpful pieces of advice that will get you up and running and help you to make intelligent decisions.
- Immerse Yourself
It may seem obvious, but one of the most important things that you can do is to immerse yourself in the world of investing. This will include reading the latest news each day, signing up for newsletters, reading books, visiting websites, watching videos and joining the many online communities for investors. Once investing becomes a key part of your life, everything will start to click into place and you will soon be able to spot trends and know when the time is right to invest.
- Develop A Long-Term Plan
Some people are lucky and hit gold with their investments, but for most people it is a gradual process so it is a smart idea to have a long-term plan in your head. This could be to buy a new home, to be comfortable for retirement or simply to have enough money to lead a comfortable lifestyle. When you have an end goal in place, it helps you to focus and keep your eyes on the prize if things start to drag at any moment.
- Diversify Your Portfolio
This is one that everyone knows, but it is worth reiterating as it is crucial to being successful. You can manage risk by diversifying your portfolio with a wide range of investments – too much concentration is a huge gamble as you could win big, but, equally, you could also lose big too. Small investments will spread the risk and, although not as exciting, should allow for success over a sustained period of time.
- Avoid Overtrading
There is a famous phrase in the investment world which goes “money is like soap. The more you handle it, the less you have”. If you constantly move your money around in the market you will start to lose it due to the various costs involved as these can escalate quickly.
- Research Before Investing in Stock
It is easy to get caught up in all the excitement when you hear about an up and coming stock, but the great investors will always take their time to research the company before they decide. This will involve analyzing the business model, looking at their competitors, threats of disruption, etc.
- Don’t Be Scared of Cutting Your Loses
The world’s best investors do not get everything right, but what makes them the best is that they know when to quit. You need to cut out all of your losing positions instead of waiting and hoping that the stock will bounce back as this very rarely happens and it is simply a waste of time, money and resources.
- Invest in What You Understand
If you do not know exactly what it is that you are investing in, then it is never a good idea. The recent cryptocurrency and Bitcoin craze is a good example as people had no idea what they were investing in and, ultimately, it came back to punish many of them.
- Seek Guidance
As mentioned, there are a lot of great communities out there as well as advisors and services which can provide insightful money management tips. These will, essentially, do the hard work for you by using their network and insight to identify the biggest profit opportunities before everyone else does which allows you to get in on the ground floor and make the most money.
- Think Independently
Although it is a great idea to read tips and seek guidance from those that you trust, at the end of the day it is important that you are able to think independently and avoid following the herd. Educate yourself via reading, courses, lectures, etc. and this will give you the compass that you need to make intelligent decisions, otherwise you are simply a lazy investor that follows the crowd and tries to piggyback off of the work of others.
- Remove Emotion
Following on from this, it is important that you are able to remove emotion from your decision-making process and simply use your brain to power decisions. Financial television will purposefully create drama to improve their ratings, and obsessing over movements (see more on this below) can create a lot of unnecessary emotion, so try to tune this out and be rational with your decisions.
- Regular Reviews
It is important that you schedule time to regularly review your investments as the markets can be extremely volatile and this can be dangerous (or very good!). Do not obsess over movements but be sure to keep an eye on your investments so that you can make timely and intelligent decisions.
- Do Not Let It Run Your Life
It is very easy to let the world of investments run your life, but, much like you need to with a job, you need time away and to focus on other parts of your life. Be sure to spend time with your family, engage in your hobbies, exercise, eat well, socialize and generally lead a healthy lifestyle. This will help you to make smarter decisions and avoid overstressing and obsessing over your investments and the market.
These are just a few tips that any entrepreneur entering the world of investments can benefit from. It can be a difficult world to navigate and there are sure to be plenty of ups and downs, but this is all part of the game and the key to success is properly educating yourself and making rational decisions at the right time. With this, you will be on the right path and should find plenty of success down the line.
