How to Be a Successful Investor
Are you interested in boosting your net worth? While living below your means and saving as much of each paycheck as possible is a good practice and may even help you build up a modest nest egg, there is more that you will need to do to generate substantial wealth. Money that sits in a checking account generates very little interest, almost a negligible amount, and adding to that sum through working alone will be a slow process, even if you are a well-paid professional. The path to true wealth involves generating passive income, or money that you earn without putting in effort regularly. Invest some of your savings in the stock market, and you will find that your net worth increases while you sleep. Read on to learn how to get started in the world of investing.
Speak to a Professional
If you are brand-new to investing, it can be difficult to know where to begin. Don’t just choose a fund or two and hope for the best: do as much research as you can on your own, then schedule time with a professional who can explain things further. This could be a friend or family member who is well versed in the stock market, the accountant you call each year during tax season or even a prominent venture capitalist with a track record of success, such as Mark Stevens. By getting advice from someone with investing experience and expertise, you will increase your chances of making wise decisions right from the start. If you don’t have anyone in your network who fits the bill, online courses and books which explain the basics of investing can be useful tools. You can also subscribe to daily podcasts and email newsletters that explain the day’s top stories in a way that is easy for anyone to comprehend.
Buy Low, Sell High
This strategy may seem obvious, but it rings true nonetheless. If you look up a particular company’s stock and find that it has fallen in recent weeks or months, you should consider buying a few shares, since market conditions will eventually change and the price will begin to trend upwards again at some point. Once that happens, you will have earned a profit on your initial investment. This assumes, of course, that the company in question has a relatively stable future ahead and is not on the verge of bankruptcy.
The “buy low, sell high” strategy applies in a macro sense beyond individual stocks, as well. In situations when the whole market crashes, such as when COVID-19 was first declared a pandemic in March of 2020, some investors may panic and sell their shares. In the short term, prices are plummeting, and they are afraid of losing everything. It is important to keep in mind, however, that this tactic is shortsighted. Even when the market as a whole suffers a blow and you see your portfolio become less valuable, remember that conditions will inevitably shift. As months pass, those shares will recoup their value, and you will be better off if you do not yield to panic and sell.
Invest in Companies You Believe In
When it comes to purchasing individual stocks, take a look at your own spending habits and those of your friends and family. If you or your acquaintances are loyal to a certain company, chances are, you are not the only ones. That company is doing something right, and it is most likely a safe bet that its stock will be on the rise in the near future. If you are risk-averse, there is nothing wrong with starting small: even buying one share is a good start. Then, as you get more practiced, your confidence will increase and you will eventually be more willing to make medium to large investments. Pay attention to trends in the news, on social media and out in the world to see if you can predict what the next hot item will be.
Getting started in the world of investing may seem intimidating at first, but there is nothing to fear. As with any new skill, it takes time and practice to learn the ropes and get comfortable. Try setting aside just a few hundred dollars at the beginning, and spend plenty of time learning all about the stock market before making your first investment. Remember that you should never invest more money than you are willing to lose, since the market can be unpredictable at times. Do not hesitate to reach if something confuses you or you need help. Many online forums can provide answers to any of your questions, as well as certified public accountants (CPAs) who will be able to share their expertise. Good luck on your investing journey!
