The world of investment is often seen as being out of reach to anyone who has less than $1 million in the bank. Many people would love to have enough spare cash to risk investing it, but the fact is the process of investment might always seem out of reach.
What is not known about the world of investment are the strategies used by some very successful investors. Tim Sykes made a fortune from money he was given as a gift, as have thousands of other people who were brave enough to take the risk.
If you are considering investing money, you may be interested to know about 4 investment strategies that could save you a lot of time, and money too.
#1 Don’t Just Invest In Companies You Like
New investors are often encouraged to invest their money in companies they like. However, doing so could potentially leave the investors with individual stocks that may not always perform well.
Investing individual stocks in such companies could leave you focusing on the wrong aspects. It would make more monetary sense to be aware of asset allocation, rather than a specific risk, such as how your favorite company is performing.
A company that you like may seem to be doing well on the stock market, but things can quickly change. Shares can fall rapidly, and leave you with no return. However, concentrating on asset allocation which balances risk and reward is the way forward.
#2 If You Make A Wrong Decision, Move On
You may occasionally make a mistake and invest in a stock that isn’t moving in the direction you hoped it would. Rather than hanging on to the stock hoping it will right your wrongs, you should simply let go.
Emotions often make their way into investments, and you may feel inclined to hang on in a bid to heal your pride. Accept that you made a wrong decision, and move on so you don’t end up losing even more money.
#3 Resist The Temptation to Cash Your Money In
You may be tempted to cash your money in once you have achieved a balance of $15,000 for example. However, cashing in doesn’t always come cheap, and you may have to pay penalties and taxes that could leave you with just $10,000.
If leaving your money in place will ensure you gain 5-6% each year, you could end up with an extra $7,500 in just 10 years time.
#4 Buy, Hold, And Sell
Use the ‘Buy, hold and sell’ strategy to help you organize each of your investments. When the time is right, you can sell your investments on, but only after holding onto them while you wait to see how the market is performing.
The buy, hold, and sell strategy could potentially save you a lot of money, or simply let you know if you should hold on just that little bit longer. Adopt this strategy for every one of your investments, and you’re less likely to lose out big time.
You may be eager to enter the world of investment in the hope that you will make a lot of money, but being too eager could result in some wrong decisions. Take your time, understand how the market is performing, and invest when you feel it is safe to do so.
Have you tried any of these investing strategies? How has it improved your retirement savings? I would love to hear your thoughts on this topic below.