Those who arent experienced in investing could use a little lesson on it's ins and outs from the experienced veterans. Curiously enough, that's exactly what this article will try to do, focusing on four lessons that are the most beneficial for someone new to investing to consider. Risk and Return In any field you choose to enter the amount of success you have is going to be based on your balance of risk and return. Do you drive a little faster around the turn and risk spinning out with the reward of moving up a spot in the race? Do you take the 3-pointer to win when a simply lay-up will send you to overtime? The right balance of risk and reward can make you wealthy or penniless, based on your management. Generally, the younger in the game will play more high risk-high reward games than the older, who are nearing retirement and ready to begin hitting the golf course on a regular basis. The Certainty of Diversification Keeping yourself diversified makes you a little less prone to falling completely apart at the seams. The more diversified your portfolio is then the better your opportunity to be a success is, it is your cushion against failure. Dont be afraid to be involved in several different stocks or funds because this is your safety net; be prepared for the downtimes because they will come! Predicting the Future is Not Recommended Just because it has happened before doesnt mean that it will happen. Many get lost in the quote history repeats itself, but this is more of a warning to learn from our mistakes. If you continue to be ignorant and spread yourself too thin or put all your eggs in one basket then you arent learning from history. Picking dates and trends to predict the next market crash does not work, so dont try it! Hot advice and insider tips are the same type of ridiculous guessing, not fact based predicting. Dont try to predict what will happen, just make informed decisions with the information you have at hand. The Standard Efficiency of the Financial Markets There are plenty of buyers and sellers that are fair, orderly, and competitively designed to do one thing, earn people money. Be open to all markets of investment that are structured to make people money. You do not have to and should not trust every person you encounter in the business, this is dangerous. Try to weed out the honest advice from the not-so honest advice and be smart. This is an old field, financial markets didnt just open yesterday, they have been making people money for a very long time. And remember, please remember above all else, no matter what anyone else might say - there is certainly no such thing as easy money! I know - I've looked everywhere, even down the back of the chair! Nothing! But there is plenty of extra money you can get - by investing wisely and carefully! Go to it! |
