Top 10 Investment Tips, Before you start and before you invest in anything, do a lot of research. Read blogs, how-to’s, investment books, etc – the more you know, the better prepared you will be. I recommend trying this guide to investing your money – it covers all the basics and has a quiz at the end to quickly test your knowledge, so you can get an idea of how much you really know about investing.
Top 10 Investment Tips
Make investments automatic
Plan for a set amount of money to be automatically invested in some type of investment account each month. Brokerage and financial services firms encourage investors to set up automatic investment plans that purchase investments on the same day each month by electronically transferring funds from bank accounts. When investments happen automatically, don’t be tempted to slow down.
2. Don’t try to time the markets
Even the most experienced financial professionals can rarely tell when the market is. If you invest regularly and for the long term, you will be in ups and downs. You’ll benefit from the phenomenon known as dollar cost averaging. Basically, you put in the same number of dollars each month, so when the markets are high, you buy fewer shares, and when they are low, you buy more.
- Invest early
The earlier you start, the less money you need to allocate each year to reach the same goal just because you started early. Profits also accumulate over time.
- Putting money into retirement accounts
Retirement accounts offer significant tax benefits. Some accounts make your initial investment tax-deductible, as with traditional IRAs and 401(ks), while others make you pay taxes now but not when you withdraw money in retirement, as in the case of Roth IRAs. Some employers even match the money you contribute yourself.
Sometimes when stocks go up, bonds go down and vice versa. The real estate market often marches to the beat of its own drum. Commodity prices and benefits can be unpredictable. Putting a little here and a little there will help prevent you from losing too much if one sector goes down while the others remain flat or higher. You can also invest in overseas markets, which often do not align with US markets.
- Know your risk tolerance
You need to understand your level of risk tolerance. If you can afford the potential losses, higher risk investments may be right for you. If losing a few dollars makes you lose sleep, you will be better off with stable investments, knowing that these investments also do not bring you many opportunities for big rewards.
- Stay informed
Read about your investments. Find reputable print, radio, television and internet sources and keep abreast of market and global economic trends. It is crucial that you understand what you are doing with your hard-earned money.
- Be careful of commissions
Don’t let professional advisors bully you. If your advisor urges you to buy investments that pay him high commissions, you have to question the wisdom of those investments. Some financial professionals are famous for suggesting products that pay big commissions to sellers but are often not the best investment for the buyer.
- Review your portfolio
A good wallet today may not bet the best wallet tomorrow. It is important to review your investment mix periodically. The economic climate changes from time to time, and your need for money also changes.
- Be aware of time horizons
Keep your riskier investments for the portion of your portfolio that you keep long-term, such as retirement accounts. It is better to leave the money needed soon for a major purchase or a life-changing event in monetary formulas.