It is an investor’s psychology to think of a strategy whenever it is the time to plan for investment, invest in different options, or save the invested money. Although trying several investment strategies is the way to maximize the returns, none of them gives you the desired result if you do not apply some universal tips.
Well, most of these tips are sadly not applied at all or are just overlooked, even though they might be based on the fundamentals of investment. The fact is that even the smartest strategy can make you lose money if you do not use the basics. So, which are these tips that move around the basics to make you gain maximum? Well, let’s check out!
Always Continue with Dollar Cost Averaging
It is always tempting to buy in a bullish market and sell in a bearish market. However, such a behavior significantly reduces your returns. Thus, it is best to be a dollar-cost averager.
It means to invest a fixed sum regularly, regardless of the market trends and conditions. For example, if you invest $200 every alternate month irrespective of the market conditions, you are following the tip of dollar-cost averaging.
What’s the benefit:The market trend is generally upward in near future, which means you buy more when are prices today are lower than what they will be tomorrow.
Include Stocks and with Compounding Benefit Right Now in Your Diversified Portfolio
Surprised? Well, this is where most experts suggest wrongly and investors diversify wrongly. If you have a long-term goal, you can put your money in riskier options.
Such options are generally rewarding but only if you have patience and confidence without fear, emotions, and greed that make you push toward quick rich schemes. Yes, this blend of haves and have nots is essential for investing in stocks, which can give increased returns.
You need to choose from stock and stock mutual funds, as they are the ultimate winners in the long run. In the 21stcentury, stocks are defeating bonds in terms of annual returns,continuing the last century’s trend and keeping it up again. So, consider a diverse mix – invest in oil stocks (very promising at present), corporate bonds, real estate, cash, gold, and gas.
If you think that it is not worth to invest with additional risk just for some more gain, then just recall the benefit of compounding in the long term, if you start investing right now.
Take Away Motivation: Did you know that contributing some fixed amount monthly for the next 9 years and giving nothing afterwards equals to not contributing anything for the initial 9 years and then investing the same amount monthly for the next 41 years?
The key is to choose outstanding options and hold them during the market’s whirls to enjoy the reward. No idea about which stocks are good? Okay, then choose some mutual funds or else an index fund.
Know Who You Are
Are you really unaware of who you are in the market of investment? Okay, answer this: Are you an active of passive investor, or are you a speculator? An active investor expects returns as per the quality and applied research, while a passive one is a bit defensive to accept lower returns, there is no time to spend on quality research.
Currently, the passive investors look for index funds of bonds and stocks and bonds and focus only on most promising areas in the market.
Unlike an investor who considers an intrinsic value of the stock that he treats as a part of the business, a speculator determines the value only by what someone will pay. Well, both need intelligent efforts.