Putting money into stocks and shares is a popular way of getting started in investment. But – there are a lot of traps you can fall into if you aren’t up to speed. Today, we’re going to take a look at some of the common pitfalls that many people new to the game fall into. Let’s get started straight away.
Go long-term, not short-term
Unless you are very lucky, it’s unlikely that you will ever get rich from a short-term investment. Sure, there might be the odd success. But if you are the type of person that gambles short, then the chances are that a lot of your money has been put elsewhere, too. So that one success is often tempered by plenty of failures. Sensible investors put their money in for the long burn, and, typically, that is where the biggest returns come from.
Understand your markets
A lot of people are tempted to get involved in particular markets because they know that industry. But do they really? Take technology, for example. You might think that knowing all of the new smartphones that are coming out will give you an edge, but this is common knowledge. There are an enormous number of factors that can affect the success of a product, and each of them can have a dramatic impact on its share price. You have to know about the materials used in the phone’s construction, the political situation of the country it was built, and much more.
Get help when you need it
If you are new to the game, don’t let your ego get in the way of getting help. Full-time investors lose money, even with all of their experience. Find a financial advisor with expertise in your chosen stock market, and spend your time reading up on everything you can. There are plenty of blogs and publications out there that can help. We like Penny Stocks for those of you wanting to get started. It’s easy to understand and has plenty of helpful tips for beginners and experts alike.
Spread your wealth
Don’t pump all your money into stocks. Sensible and successful investors like to have a good range of investments to reduce their risk of losing their savings. The stock market might be steady for months, but all of a sudden turn into chaos. General elections, natural disasters, and diminishing sources of materials can all have a huge effect. If your money is all in one industry, you run the risk of losing everything overnight. So, look into a good mixture of different stocks from separate sectors, and also look at bonds, property and currency. It will help you give a healthy portfolio, and you will lose less if something goes wrong.
Don’t believe your hype
It’s easy to get carried away with a big win. But, these tend to be few and far between. In most cases, getting fantastic returns on the stock market is as much to do with luck as it is with anything else. And, it has a habit of biting cockiness somewhere very painful indeed.
Need any more tips? Take a look around our blog for more great tips on investment, saving, and finances in general.