JoshInvestment isn’t an easy route to riches. It’s a profession, and making a success of it requires work – which is why over 90% of those who take it up drop out sooner or later. However, this doesn’t mean that you can’t do very well out of it if you’re willing to make the effort. The following tips will help you avoid the simple errors that often lead beginners into trouble.
Don’t dive straight in
Tracking fantasy investments for a few months is a great way to get the hang of the process before you risk real money. Becoming an investor means that you need to learn new skills, develop new instincts, and get into good habits. Give yourself the time to do so.
Don’t put all your eggs in one basket
It’s a good idea to draw on your existing expertise from other areas when you first start investing, but not to the extent that you put all your money into one type of asset. Don’t be tempted to put everything into single “sure thing” assets either. A strong portfolio is a diverse one.
Don’t pay over the odds on fees
Every trading platform comes with a different set of fees attached. Sometimes, even after you’ve paid a subscription, there are extra charges for the services that you want to use, or hidden fees. Read the small print to avoid getting ripped off.
Don’t try to get by on cheap deals
Investing is like shopping – you can’t be successful just by looking out for low prices if you’re ignoring quality. What matters is not how much you pay for an asset up front but how much you can expect to generate in profit when it ripens. Sometimes, more upfront expenditure generates proportionately better results.
Don’t forget how risk and return intersect
As a rule, high risk in taking on an investment is compensated by high rates of return. Striking the right balance between these two factors is key to developing your trading style. Strong portfolios usually incorporate assets with different degrees of risk attached.
Don’t try to go it alone
Networking with other investors means that you can learn not only from your experience but also from theirs, so if you’re offered a subscription including a stock trading chat room, then use it! Having friends in the business can also help to keep you grounded and safer from impulsive decision-making.
Don’t get lazy
Investing successfully is much easier when you understand the market and the sectors that you focus on, when you research companies before buying, and when you keep up with current affairs. Don’t expect everything to be handed to you – you have to make the effort if you want the rewards.
Following this advice will help you avoid the major pitfalls that lie in wait for unwary investors. Over time, you’ll get much better at anticipating problems for yourself, and if you make it through your first year as a trader, then you’ll hone your skills and stand a much better chance of long-term success.