Most of us have considered the investment route when it comes to our money. It can often provide a much better return than the interest rate at your bank. Rather than have your cash sitting in a savings account, why not invest it? Of course, many are put off by the horror stories. We always hear of Wall Street brokers who lost their fortune on the stock market. Unfortunately, this does happen.
However, these investors are playing with risk every single day. Not all investments are about high risk and overnight riches. Instead, most successful investors play a relatively safe and secure game. In this post, we’ll explain how to do this. We’ll show you how to take all the risk out of your investments.
Play the Long Game
The stock market has a reputation for instant, overnight riches. This does occasionally happen, but it’s a risky game to play. Instead, the best investors invest in the long term. In general, the market will always go up. If you invest for the long term, you’ll ride out the recessions and the dips in the market. Invest over a ten-year period and you’ll see big results.
Stock Exchange by Travel Aficionado, on Flickr. This work is licensed under a Creative Commons Attribution-NonCommercial 2.0 Generic License.
Don’t Bet on Stocks
This is the technique that comes to mind when we think of the stock market. We picture brokers desperately buying and selling at exactly the right moment to make their fortune. You buy when the share prices are rock bottom and sell at their peak. This is the route to big fortunes and overnight riches. But, it’s also the route to financial ruin if you get it wrong.
Diversify
The number one rule of investing is diversification. As the old saying goes, ‘don’t put all your eggs in one basket’. Spread your investments over a number of different shares, industries and strategies. Invest in premium bonds and property as well as stocks. If you invest heavily in one company and it tanks, you’ll lose everything. Spread the investment and you’ll protect your money.
Get a Financial Advisor
It is possible to learn the ins and outs of investing yourself. You can also do all the necessary research on the company you plan to invest in. However, it always pays to have a ‘circle of trust’. This is particularly important if this investment will be your retirement fund, or IRA. Get a financial advisor and a tax expert. Follow this link to find more tips for investing with a self directed IRA.
Never Invest More Than You Can Afford
This is the real core of investing. It is simple advice, but something that so many fail to heed. Don’t start reaching into your emergency fund or the kid’s tuition fees. Just direct a small, sensible amount to your investment account. When it grows and you understand the process, you can send more.
Investing is a complex process. When done wrong, it can be risky and dangerous. However, follow the advice here and you’ll set up safe, lucrative investments. Good luck!
