3-Outsource help
As much as you may have an idea about
what you want to do, if you feel the need
to have a financial coach, don’t hesitate.
An expert who knows the trends of the
market and the rules that govern it is
definitely an asset to have.
Now that you are prepared, below are the
fundamentals of investing.
III. Diversify your portfolio
It is never said enough, let us say it
again: “Do not put all your eggs in one
basket”. Do not put all your money in
one company. If that company fails,
you are done. Try to diversify the type
of investment (stocks, real estate, commodities ...). And if you are familiar
with more than one sector, diversify
your sectors of investment as well.
However, you do not want to have
many baskets that you are not able to
hold anymore. Diversify reasonably.
IV. Buy low, sell high
I. Invest in sectors you are familiar with
Given that you have a financial coach, it is
still the right thing to do. Being familiar
with a sector, gives you the privilege of
knowing when this or that company is
failing or succeeding. This alone is enough
to make you well positioned for investing in
that sector.
Disclaimer: while it is the right thing to
do, it is not necessarily the best thing to do.
History has proven that even if you ignore
entirely a given sector you can still make a
big hit out of it.
II. The Risk/Profit relationship
This is the most widely known investment
fundamental. The riskier your investment,
the higher the outcome, be it profit or loss.
That being said, avoid being speculative
about your investment. Otherwise, the
chances of having a good return will be the
same as winning the lottery.
This is another way of saying, be
mindful of the Demand/Price
principle. When there is a little
demand on a stock, its price is very
low. Buy it. When there is a huge
demand on the same stock, its price
goes up. Sell it.
V. Educate yourself
The more you know about investments,
the better. Educate yourself, not only
about your specific investments but the
market itself. Check its history, the
number of bubbles it had, how investors react to financial storms and how
they behave in the normal settings.
Knowledge is power. Keep researching
and updating your information.