Investing your money can be a fantastic way to earn a great return on your money while supporting the growth of ideas and entrepreneurs that you have a keen interest in. However, there is always a certain level of risk involved in investing your money and the best way to minimise this is to make sure that you are making the smartest possible decisions when it comes to selecting your investments.
Play the long game
While it may be tempting to invest heavily in shares that you believe will bring about big payouts quickly, there is serious risk involved in this type of investment. You could quickly lose everything if the value drops. What’s more, avoid ‘flipping’ stocks quickly, frequently buying and selling them to try to ‘beat the market’. Not only will this cost you more in brokerage fees, but nearly 82% of daily traders make losses, so holding out can be worth your while. If you are able to, invest in stocks and bonds that have better long-term projections, and consider options that pay out dividends if you want regular rewards. Dividends can be a small yet steady drip, yet there are some people who, with enough upfront capital, are able to live off of their investment dividends.
Make a plan – and stick to it
Having a short and long-term investment plan that details your goals, time frames, objectives, expectations, the types of investments you want to make and the risks you are willing to take will help you achieve your financial goals. It’s important to be realistic with this so that you are easily able to follow it through good times and bad. Sticking to your investment plan will also help you avoid making impulsive decisions that could result in costly mistakes.
Avoid holding only one investment
It’s important to diversify your investments across different companies and even different markets. Even if you invest in a number of different companies in the tech sector, for example, there could be an unforeseen circumstance that means the entire tech market drops. How much you diversify by is up to you; while splitting your capital across a higher number of investments will lower the risk of all of them plummeting at once, it’s also less likely that you’ll see all of them skyrocket at once too. You would also end up paying out more in brokerage fees for this, so try to find a middle ground.
Get wiser with your intel
While it can be tempting to follow through on a wild tip because it has come from someone you know well, it is important to pay your due diligence and properly research every opportunity before you commit yourself to an investment. You can do this by signing up to an investment support service, especially one that provides access to an expert network of experienced investors and industry insiders that will be able to provide you with trustworthy information backed up with data.
If it sounds too good to be true…
… it probably is. The smartest thing you can do when it comes to investing is to proceed with caution. Remember that there are absolutely no guarantees in investment and with higher potential payouts come higher potential losses. There’s no such thing as a risk-free investment but by practicing consistency and allowing yourself to build up experience, you can make your money work for you.