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Lessons Ive Learned from Top Investors

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Ive been investing in financial assets for going on 5 years now. Prior to this, I had a little trepidation about the stock market. My perception of the bourses led me to believe that this was an institutional arena best left to those with extensive knowledge of the financial markets.

I didnt have a Bachelor of Commerce, or an MBA, so therefore I wrongly assumed that trading and investing were things that other people did. Then I started earning a decent salary, and my accountant advised me that I could defer taxes on part of my earnings by investing in a 401(k).

This was a godsend to me as a self-employed individual, since it saved me 30% 35% of taxes on $17,000 $18,000 per year. Add that up, and its a pretty tidy sum. Even if you dont know a whole lot about what stocks to invest in, there are easy solutions. For example, the most important tip I learned from a top investment guru was the following: Minimize your risks by investing in mutual funds over individual stocks.

As a novice investor, I assumed that if a stock looks like its going to do well, you should invest heavily in it and hope for the biggest returns. Unfortunately, stocks have yo-yo fever. They rise and fall on a whim. Many stocks are already at record-high levels on Wall Street, the CAC 40, DAX 30, and the FTSE 100 index. We are living through a golden era for stocks, but analysts are concerned that the sun may be setting on stocks in the not-too-distant future.

Instead of putting all of your proverbial eggs in one basket one stock diversify your investments by opting for mutual funds. These funds are an agglomeration of top performing stocks in an industry, sector or category. You could have mutual funds related to energy stocks, mining stocks, technology stocks, the overall performance of an index etc.

Thats lesson number 1.

Why Sage Advice Really Matters

Im not going to bombard you with trading strategies and tactics thats a discussion for another time. Today, Im introducing you to the most important lessons that I learned from people who really understand investing. Once I was familiar with the online trading scene, I quickly learned which stocks showed promise for trading, and which ones were long-term investment-grade stocks. Over the years, Ive come to trust only a handful of trading platforms and brokers, SnP investments chief among them. Once youve decided on a brokerage, perform the following 4-step verification process:

  • Contact customer support and see how responsive, professional, and courteous they are
  • Check the range of financial instruments on offer (stocks, commodities, indices, currency pairs, cryptocurrency etc.)
  • Evaluate the trading platform and its mobile functionality everyone trades on mobile devices today
  • What educational resources are available, including guides, tutorials, videos, webinars, seminars, articles, professional traders etc?

Based on the feedback you get from customer support, the professionalism of the services you receive, the range of tradable assets, and the education you can enjoy, you will have a pretty good idea about the broker. Its always important to be able to contact a trading professional to understand things like call or put options, stop losses, take profit, trailing stops, auto trading, economic indicators, margin, leverage and others. These terms may appear a little overwhelming at first, but once you start working with them in a demo trading platform strongly advised you will quickly appreciate these trading tools and resources.

Which Investments Should You Make?

This is an interesting question. Every investor or trader is different. Sometimes, you will get an inkling about a specific financial asset. Perhaps you are eager to trade Disney, Microsoft, Google, Facebook, or another stock. You may find that your interests lie with your countrys currency the USD, GBP, EUR, RUB, SEK, JPY, ZAR etc. Whatever you decide upon, ensure that you practice your trades before you invest real money.

By mock trading, you will be able to see how effective you are in the markets. Call options are placed when you are bullish about an asset, and put options are placed when you are bearish about an asset. Always set a budget for your trading activity. I recommend allocating no more than 1% of your available bankroll to any individual trade. That way, you are assured of relative security if a trade does not go your way.

What has been your experience with trading and investing? I would love to know how you have fared in the financial markets, and what other tips you would like to add to the ones Ive already listed. Please let me know in the comments below.

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