Whether you’ve invested in the past or you are new to the game, there are a few things you should know before you start investing in stocks. It’s a game that you can win, and win big, and it’s also a game that can devastate you if you are not careful. Back in 2008 when the market crashed, lives were ruined.
There were many people already at retirement age that lost it all, and there were those of us who are still young enough to know that we have decades to bounce back from our losses. Some cut their losses and ran. Others stayed in the market. We all took a hit, and many of us are happy with the turn of events in recent months.
However, that doesn’t change the fact that the stock market is a gamble. You put your money there, you can’t know what will happen to it; you can only hope. The good news is that we have some tips for you that can only help.
Maintain Your Budget
If you have a certain budget to allot when buying stocks, stick to it. Do not allow anyone to convince you that you should invest more than you can afford, because the truth is that you cannot afford to do this. What you can afford to do, however, is invest what you can afford. Anyone who tries to talk you into more is not on your side and is worth of moving away from.
Keep it Simple
The simplest way to make money is to stay simple. Don’t get complicated. The stock market is complicated enough without you turning into a complicated monster. There is no need to trade and sell every single day. Invest, watch and then make rational decisions. You can do it. You are not the Wolf of Wall Street; and you need not behave as if you are.
Have No Expectations
The best way to invest is to do so with zero expectations. What do we mean? We mean that you cannot go into your investment with the idea that you are going to make a ton of money and retire in a month. You also can’t go into investments worried that you will lose it all. You have to have no expectations and just keep your eye on the prize. This is stellar advice.
Ignore Other People
You do not need to listen to what other people have to say. Your investment manager has an opinion and you should hear it. Your friends, on the other hand, you should ignore. If they tell you it’s time to sell, that means nothing.
They are not investment managers and they have no idea what they are talking about. Don’t let the chatter of others around the world scare you and drive your investment decisions on your behalf. You are in control; stay that way.
Stay in Tune with Your Stocks
Many people let their investors do the investing and they sit back and ignore their stocks. This is a mistake. You should keep up with the game. When you invest in stock, you become a part owner of a company.
This means that you should do whatever it takes to act like the owner of that company. Keep up with its financials, see the trends and note what is happening in the world of that company. It’s what’s going to ensure that you do things right and stay on your “A” game.
Never Buy High
The one rule of good stock market management is that you never buy high. If you come across high prices, steer clear. You don’t want this. When it’s already high there is no way to guarantee that you will be able to get anything back for your investment. You run a much higher risk of losing it all than you do of making money. You always buy low and sell high. It’s never the opposite way around.
Never Sell Low
When prices drop, don’t panic. There is a good chance that they will go up again. And you have everything to lose when you sell low. Keep your stock and let it get higher again. This is where investments make money off of patience. Things happen and stocks change, but you can’t worry that they will never come back. You have to have faith that they will go back up again and you can then make some financial decisions.
Past Performance is Important
Many people say that the past is in the past, but we beg to differ. We feel that the past is where most people derive a good idea of what’s to happen next. Past mistakes, past trends and past happenings have a unique way of repeating themselves.
If a company tends to go up and down and then back up high again, chances are good that this is going to happen again. The past can give you a very good idea of what to expect from the future. It’s not guaranteed, but nothing in life – other than death – is guaranteed.
If you’re going to enter the stock market as an investor, you have to be patient. There is no other way to put it. You cannot panic, be rash or make decisions at the spur of the moment. Patience is the biggest virtue in the stock market, and we simply cannot stress this enough.
You have to be patient. You have to be patient enough to understand that you cannot make decisions that are not well-thought out and educated. Be patient; it’s the best advice we can give you.
Don’t be Stubborn
Stubborn behavior and thought processes can be a killer in the stock market. It can make you literally lose everything. If you need to make a decision, make it. Don’t be stubborn and miss your window of opportunity. You shouldn’t be rash, but you shouldn’t be stubborn, either. There is a very fine line between being patient and being stubborn, and you have to be very aware of these boundaries and wherein they lie.