Investing 101 Part 3
Risk is Function of Age.
A younger person should take more risk in their investment strategy if they choose to do so.
Why? There are several reasons for that. The first is that if you ever take a loss because of your risky position, you have more time to recover from it. The closer you get to your retirement, the less risk you want to take, because you don’t have the luxury of waiting it out and recover from your loss.
The other reason is that you have extra time for growth and by taking riskier position, you can make even more money in the long run. You have the luxury to wait and see how things evolve.However, take note that I am not telling you to go overboard with risk! The risk level is yours too control, but you should have some investments on the edge of your comfort zone.
Take risks, but not too much
I don’t know why, but it seems that, as human being, when you are a newbie at something, you always tend to take extra risk that are really unnecessary. My guess is that newbie don’t understand the risk and they don’t understand the consequences of these risk.
In any case, you shouldn’t be taking those kind of risk or like Icarus you will burn yourself and fall. You need to have some sort of self control and no go beyond the real risk you are willing to take.
Yes, risky endeavors have a lot of good potential, but until you know how to manage these risky stocks, you are way better looking at a long term steady return. You don’t have to always beat the market, making the market is still pretty good. Again, you don’t take too much risk, if you really want a high level of risk, try it out with a small portion of your investment, not 100%.
Buy when Stocks gets Low and Sell them when they get High
“Be fearful when others are greedy and greedy when others are fearful.” — Warren Buffett
Sounds simple isn’t it? When your stock are high, sell them, if the price is low, you enter the position or buy more shares. This is the name of the game. If you ever become good at that, you will be in a good position to make a lot of money. Sometimes, getting out of a position is the best thing to do and you will need to make the call to sell that position even if it’s low. Remember, do your due diligence before selling.
Anyone can become a Successful Investor
Everyone should be learning the basics of investing. Even if you are a stay at home mom, a doctor or an engineer who doesn’t even do it’s own tax! After all, it’s your own money, you are ultimately responsible for your own financial well being and your retirement money.
And as I explained before, investing your money is the best way to make any appreciable money with your money. Some friends and coworker think that a good investment starts with a saving account. A saving account is not an investment! However, having a good saving account will be very useful for short term money or money that you need accessible rapidly like for an emergency fund. Anyone’s can start an investment and everyone should become an investing beginner!
Your Investment needs Regular Attention
An investment is like a small plant that is growing. You need to check on it often, you need to take care of it. Same philosophy applies to any investment! I don’t say that you need to invest money in it every week or everyday. You can also invest time toward your investment. Reading/watching about what is happening in the market every week at a bare minimum, is very good start! What would be the best is that you get a little knowledge and information everyday. Bloomberg TV is a great asset for that or even Bloomberg Business. You might also want to read forums on investing and growth funds.
The reality is that you need to take an active role in managing your investments, even as an investing beginner, you cannot park it somewhere and expect it to see grow like crazy! It needs to be checked on often, you need to take time to do your research, feeling the market and make sure that your investments are ok. You can be sure that the Investing World is changing, and sometimes it can be very quickly, you need to be aware of what is happening if you want to make the best decision.
Investing is the Right Thing To Do, and To Do Right Now
Investing is for everyone, you just need to learn the basics, do your research and you can start your journey in the Investing World. It’s a frightful place I admit, but if you follow those basics, there is a good chance that you end up with more money then which with you started.