During the coronavirus pandemic, a lot of people found themselves stuck at home with nothing to do. A lot of these people could no longer go shopping or out to eat and many were even getting money from the government. Flush with cash, or perhaps looking for a way to make a quick buck, an unprecedented amount of people turned to the stock market.
A lot of these people saw their investments rise significantly. But a lot of people also saw a lot of their money vanish almost instantly.
By following well-worn investment tips, you can ensure that you get rich slowly. Which is often preferred to getting rich quickly and then getting poor even faster.
Nobody knows how an investment will ultimately turn out. But when you know what to look for and what to avoid, you can set yourself up for some long-term success.
Would you like to learn more? If so, then keep on reading and we will take you through the top investment tips that you need to know about!
1. Sell the Losers
There’s no guarantee that an investment is going to pay off, or that it will rebound after its value goes down. You always need to be realistic about the prospect of investments that perform poorly.
People tend to get very emotional when it comes to investments and it is easy to get attached. When you sell a bad investment, you might consider yourself a failure. This isn’t healthy and it can lead to you holding onto a bad investment.
There is nothing wrong with recognizing that your investment didn’t pan off as you intended and selling the investment so you don’t take on further losses.
You need to judge investments based on their merits and be constantly re-evaluating them.
2. Don’t Sweat the Small Stuff
It is not healthy to check in on your investments every day, and especially multiple times each day. You should check in at regular intervals, whether that is once a week, once a month, or once a quarter.
Completely forgetting about your investments is also not a great strategy. But you don’t want to freak out if your investment drops for a day or two.
Day traders will be judging the value of a stock non-stop. But as a long-term investor, you can’t let yourself get sucked into that kind of mania.
Trying to time the market is a risky and often fruitless endeavor.
3. Buy the Rumor, Sell the News
This is a common expression on Wall Street and it is good advice to follow. This adage means that you should buy a stock when there are whispers of a major catalyst possibly occurring in the future.
For example, it seems like a merger might happen or the company is going to come out with a new product. This is the time to buy the stock.
If the news finally comes out and the company officially announces the merger, that’s when you want to sell. This is because the stock market is a discounting mechanism.
That means that the stock market prices in future value. So by the time an announcement is made, the stock market will already take the next several months’ worth of earnings into account. If a company officially announces a merger, then when the merger actually happens, the stock won’t go up because of it.
4. Cost-Dollar Averaging
Cost-dollar averaging is a strategy where you buy a certain stock at certain intervals. For example, you would choose to buy Apple stock on the first day of each month.
Doing this takes all of the emotion out of stock buying. Ideally, your stock purchases will average out over time.
If you bought 12 shares of Apple all at once, you might be buying it at its highest value. If you bought one share each month, then you would be able to buy it as it goes down and as it goes back up.
This is going to help ensure that you buy the stock without trying to time the market. You might end up paying more one month and less another month. But it should all work out in the long run.
5. Resist the Lure of Penny Stocks
When you buy stocks, you shouldn’t pay attention to how much each share is actually worth. Buying a stock worth $5 doesn’t mean it’s actually cheaper than a stock worth $100.
What matters is how much money in total you plan on investing. If the $100 stock has better fundamentals, then buy one of those shares instead of twenty of the worse $5 stock.
6. Diversify Your Portfolio
Don’t just buy stocks. You want to diversify your portfolio so that you can hedge against risk. Consider buying real estate and even cryptocurrencies.
It’s easy to look up something like ethereum price CAD or USD and see how much your money converts into crypto.
The Importance of Using These Investment Tips
Hopefully, after reading the above article, you now have a better idea of how to use these investment tips to boost your finances. As we can see, it will take some work and patience, but hopefully, it will all pay off.
Either way, make sure that you invest smartly and that you don’t allow your emotions to simply take over. After all, your investments won’t care about your feelings.
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