So what are the secrets of investing?
To most people the stock market is a strange world where they hear stories of people losing money and companies go bankrupt. However there are opportunities to make it in the stock market, provided that you adhere to some sound principles.
Most of the investment gurus (John Templeton, Peter Lynch, Warren Buffett) have explain some pretty simple principles to which the beginner investor must adhere to.And if there’s one thing that they all agree on, it is the fact that the beginner investor must go for the long term and not aim at making large profits on the short term. In simple term, invest in the stock market not to make money today, but to make money in the long run. Successful investors that make alot of profits have invested for the long term and are not looking for the hot stock that would make them rich. The problem with this way of investing is that it is impossible to get to the hot stock before its price goes up.
Although it has been said time and again, it doesn’t seem to stick: when investing, time is on your side. The stock market always go up on the long run even if they go down in the short term. The longer an investment is held, the greater its chance to increase in value.As an investor, if you understand this, day-to-day market fluctuations will not drive you crazy and you will be able to concentrate on the one variable that you can (literally) bank on: TIME. Also buying and selling make your broker rich because each time you do a transaction you are paying a fee to him.
Investing principles 2Start out small and build your confidence while taking small risks. Invest only $100 or $1,000 instead of your entire savings.There are a lot of things that you will never know unless you’re learning by doing.
Investing principles 3
Imitate the investment masters and read about successful investors. Talk to successful people you may know and ask them how they accomplished their goals. You could be surprised how open truly successful people are.
Investing principles 4
Don’t panic and sell if things go down. Actually you should even expect them to. If you buy good companies with sound fundamentals, drops in the market value of the stock will only be temporary and might even be good times for you to buy the stock when it’s “on sale”.