What was once a domain of the wealthy is now open to just about anybody who wants to get involved. Many have become burnt by the prospects and risks of investing in the financial markets, making about 50% of investors the mom and pop types that own their own shares. World governments are making it clear that people need to take care of their own finances as government pensions are under pressure. Nobody wants to let their retirement go up in smoke. Most people are retired for about half of the time that they were in the workforce, 40 years working and 20 years retired on average. If you intend on living well in this time then it is imperative that you educate yourself about investing. This is still true if you go with a licensed investment advisor, you should know how the market works to inquire about their philosophies. Become familiar with the investment language to decide if a strategy is sound and right for you. Perseverance is one of the single biggest keys to investing, dont put everything under the bed to save, and dont expect to become rich overnight. Dont think that you will learn everything overnight, but you should consider the following about the basic rules of successful investing: 1. Manage your investments yourself. You really shouldn't let a stockbroker or financial advisor do it for you. As with most things in your life, you really know what you want and need, not your investment guy. 2. Spread your investments, though not too much, to reduce the risk possible. 3. Dont simply do what everyone else is doing, try being the chief contrarian. Find what they are doing and try the opposite every now and then. 4. Master the talk; dont be left out in the cold when investors talk the trade. 5. Dont shy away from a market staring gloomily at the future - this is potentially the better time to buy. Dont wait for things to get better, thats when everybody else will join in. 6. Good quality shares should be your core, and then go to the speculative areas. 7. You must always bear in mind the various implications to your future tax payments when investing but never let minimising the tax be the one and only or sole objective. Always try and follow a sensible rule of thinking in terms of reducing your tax returns so long as the investment is sound for other reasons as well. 8. Read the financial papers avidly and search for independent or unsponsored investment research sites to keep you on the cutting edge. 9. Investment discussion can be very interesting, even with those who make you feel inferior. 10. Don't be greedy or fall into the trap of writing "just a little bit longer to see what happens". Be strict with yourself that you'll cut your losses as soon as they appear from any bad investments and likewise, cash-in when you've made a reasonable profit - certainly to the point of securing your initial outlay in those rare cases with investments that climb massively. 11. Patience is a virtue; you wont be in the outhouse today and the penthouse tomorrow. 12. Don't invest into something you don't really understand. Investments that sound 'too good to be true', are exactly that! Avoid! 13. Make sure that you pay yourself enough before investing. Now, the general way of things for the majority of people investing their money is that they take whatever they have left over from settling that months bills and use it all. Normally - they then discover they've not left anything in case of emergency and are having to borrow to pay for an unexpected purchase or expense! Instead, set yourself a % from your monthly income that you'll use for building up your investment capital, the lump sum starter! A major benefit of doing this is that by doing it this way, you soon get entrenched in best practise and almost force yourself into becoming a long term investor - who reaps the rewards of a carefully constructed approach! These basics aren't everything you need to know - but they are certainly some of the most important cornerstones from which you should be able to build up a very successful and secure investing strategy that will pay you good, strong dividends in the future - in more than just money! |
