| Invest Safely: |
Source: Alan Jason Smith |
Whether they're working in the business
world or stay-at-home mothers, many people today are drawn to the risky
allure of investments, which can mean either huge rewards or
painful losses. While it's impossible to predict the fluctuations of the
market with 100% accuracy, as you build your portfolio, you will learn to
accept the losses and keep in mind the successes always waiting around the
corner.
No one can control the market, but you can control what you invest in.
Research products and know the businesses you're putting your trust - and,
more importantly, your dollars - in. One of the most common errors new
investors make is jumping to invest in a hot stock from the
previous year. It's a common pattern for a market high to descend to a
market low - right at the time you’re investing. This is not always the
case, but it pays to invest in a strong stock rather than a fad that's in
one year and out the next.
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Safe investing
It's also important to know why you're
investing in that particular stock. For instance, if you invest
strictly to gain some momentum, when prices fall you'll know to drop out;
otherwise, you'll sit there wondering whether to wait it out or cut your
losses.
Ironically, while it's impossible to predict the market,
investments are all about timing. Two of the
most important decisions investors make are when to take profits and when
to cut losses. When the market is up, some say it's best to run a profit -
a risky choice that could mean a huge loss or an enormous reward. However,
many prefer to take their money while the market is rising, in case a fall
is on the way. When the market is down, nearly everyone agrees it's best
to close out before it gets worse to avoid losing any more money, cutting
your losses.
Most importantly, only invest what you can afford,
and have a good reason for investing. Losses are a real part of
investment, which means you can't afford too many rash decisions,
especially when you're starting out. Don't let the market determine your
bank account unless you're using it to your advantage, whatever that may
be.
The smartest thing a new
investor can do is study the market.
Before investing in a product, look at
its record. Don't jump into any investments - think them over first. Some
good sources of information about investments include The Wall Street
Journal Guide to Understanding Money and Investing (3rd Edition) by
Kenneth M. Morris and Alan M. Siegel, The Real Life Investing Guide by Kenan Pollack and Eric Heighberger, and The Only Investment Guide You'll
Ever Need by Andrew Tobias.
If you stay well-informed and make careful decisions, the market can be an
exciting tool. In the business world, anything can happen, and with the
market highs come enormous rewards that are well worth the risks.
About the Author:
Alan Jason Smith is the owner of
http://www.stinvestments.com which is a great place to find
Investment links, resources and articles.
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