For the new investor, participating in the stock market can be a daunting experience.
Lack of knowledge and risk assessment are the major issues that face every investor, especially the beginner.
Here are some ideas to consider:
Lack of knowledge and risk assessment are the major issues that face every investor, especially the beginner.
Here are some ideas to consider:
- Know before you go.
Information is valuable.
You would do well to learn about the area of investing in which you have interest.
The library, the bookstore and the internet are good resources for gaining knowledge.
A basic understanding of how things work will allow you to take your first steps with a greater degree of comfort. - Understand the process.
Everything has a beginning, a middle and an end.
What are the practical circumstances that may affect your risk and your value? How do they occur and when? Try to avoid following others blindly.
Their situation may not be the same as yours.
It is better to rely on your own knowledge and to build your experience level. - Read the prospectus.
An investment fund has a prospectus which describes not only the objective of the fund but also the portfolio, the fees and charges incurred, the management, the nature of the risk, the valuation process, and how you put your money in and take your money out.
There is an ongoing effort to make prospectuses easier for the public to read.
Take some time to cover the basics. - Ask questions.
Someone besides you has asked the same questions before.
The investment company, the broker, the regulatory organization or an informed third party knows the answer.
Follow up on your concerns until you are satisfied. - Start small.
You are more likely to make mistakes in the first part of your learning curve.
Keep your investments small.
You will pay a lower price for the cost of learning.
Investing is not a guaranteed activity.
Seasoned investors lose money--usually because of a risk taken rather than because they lack knowledge.
Informed risk-taking is better than uninformed risk-taking.
Small losses are better than big losses. - Start simple.
There are many investments and strategies that are complicated.
Invest in what you understand.
It is not enough that someone has explained how things work.
You should understand the investment completely.
"I didn't realize that could happen," is not a pleasant admission for an investor. - Choose a suitable investment.
What is your tolerance for risk? Everyone has their own answer.
Determine your comfort zone and make sure that the investment choice matches.
A good investment is one that you can stay with over a longer period of time. - Set a goal.
How much is enough? What is reasonable? Ask yourself what you want from your investment and what is your time frame.
Periodically assess your progress toward the goal.
Are you on track or should you change your expectations? Further research may help you answer these questions. - Assume responsibility.
When you invest your money, you are responsible for what happens.
Someone else may have given you information or advice but, in the end, the results are yours.
Taking ownership of your choices heightens your level of interest and understanding.
You also gain useful experience. - Admit errors and make changes.
Sometimes impulse prevails over reason or you make a wrong choice.
A small mistake is better than a big mistake.
Be honest with yourself and take action. - Follow your own advice, avoid the herd.
The herd mentality doesn't take your situation into account.
Examine your investment choices from your own vantage point:--what is good for you. - Become your own expert.
Information or advice from others is often incomplete or misleading.
Do your own research and assessment.
Develop your own reasons for making choices.
When it comes to your money, you will take the best care.
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