6 Tips for a successful investment journey

Tips for a successful investment journey

Having financial freedom is most people’s dream that needs to be built upon through available ways. Although most opt for a savings account that offers guaranteed returns and can be accessed easily, its returns can be smaller than successful investing in a stock market. As a result, it may be time to immerse yourself in the stock market, with the aim of providing strong returns in the long run. By choosing to invest, your money will get a chance to find growth opportunities.

Your returns will depend on the volatility in the stock market, which varies from time to time. With the current low-interest rates, getting returns above the inflation rate can be difficult. Thus, a good alternative may be investing in stock markets.

In addition, you may be able to get regular income through different investments that include equities, property, and bonds. The advantage of investments is they can be tailored to your specific needs. However, starting your investment journey doesn’t mean jumping immediately. There are risks involved, and you’ll need to know how to go about it. Read more for tips to help you familiarize yourself with the basic steps in investing.

1. Get the markets knowledge

Get the markets knowledge

The stock market requires a lot of knowledge acquired through research, taking a course in modern financial strategies, or reading books on how to grow your investment. In addition, you can look for business magazines or find newsletters at moneymorning.com.au and other similar websites.

Investing is a science and art that requires making informed choices that fuel your interest. By choosing to learn, you’ll be getting information on the principles and quality of the market, and you’ll end up making informed decisions.

Unlike a savings account that doesn’t presently earn a high return, having the appropriate knowledge of the stock market may lead to high returns if you choose the right investments. When researching, ensure you understand the basics and learn the terminologies of the market, including volatility, stop loss, liquidity, diversification, risk management, and many more. You should also look into financial ratios and understand the commonly used methods of stock selections.

Another great way of making informed decisions is by assessing the company and learning its financials, growth prospects, etc. Get to know the relationship between your stock and the leading economic indicators.

2. Go for long term investments

Go for long term investments

Market volatility is the main factor when looking to invest as it measures the degree in the change of prices over time.

If you’re looking for great capital gains, choosing successful long-term investments may be the right way to go as it may provide tax advantages, depending on your circumstances.

When dealing with short-term investments, the transaction costs may accumulate over time instead of long-term investments that don’t have as many active trading transactions costs.  You can choose strategies based on your desired returns and the risk you’re willing to take with long-term investment. So, if you want to have a long-term investment plan, you’ll have so many options such as investing for college education, retirement, or future property, amongst many more.

3. Sell off a loser investment

Sell off a loser investment

As explained above, the risks that come with the investments may be high, and thus, you may need to know what to do if the stock fails to rebound. You can sell off your investments and minimize any losses. In addition, if the investment doesn’t fit in with your strategies, then it’ll be prudent to sell it off. If you keep a loser investment with the hope of having a turnaround, you may end up with lesser returns or losses.

4. Settle on a strategy that works for you

Settle on a strategy that works for you

Various ways of choosing stocks may confuse you at first but sticking to one strategy is a great way of starting. To begin, lay down an investment plan, go through it and stick to it for a better outcome out of your investment.

If you aren’t sure about your capabilities, try consulting your financial advisor to understand the market and get professional advice on the best way forward. Your advisor should suggest a realistic investment strategy based on your goals and the risk you’re willing to take.

When selecting your investment strategy, consider your resources by differentiating your options. You can always go for low-risk investments and then add as you gain more information.

5. Stay away from penny stocks

Avoid chasing a wrong stock tip

Penny stocks tend to be very dangerous as they’re not as regulated as most investments, and you may face risks, scams, and costs. When you choose to trade penny stocks, you’re leaving yourself open to scams such as pump and dump schemes that are hard to spot.  The penny stocks are also hard to buy and sell, leaving you at the mercy of other buyers and sellers dragging the stock price down.

Another scam that poses a problem is the chop stocks, making it harder to determine its market value or a fair price. In addition, its trading costs tend to be expensive as you may lack the company’s information used for analysis.

6. Avoid chasing a wrong stock tip

Stay away from penny stocks

Quick returns may sound great and tempting due to the short amount of time used to get them. If you hope to succeed in trading, you’ll be consistent in finding ideas and learning how the market works. Taking tips from the wrong people may make the wrong investment decision. As a result, stick to the knowledge you have acquired over time and use it in making your investment decisions.

Bottom line

Choosing to have an investment means thinking of the future and financial freedom. Moreover, a successful investment journey requires a lot of planning and strategizing. Take time and do your research both offline and online before investing in any funds or assets. Have a financial advisor on hand if you need help when making choices and when you get stuck on the way. You should ensure that the assets you financed today will yield a higher return on investment in the future.