After years of uncertainty and turmoil it seems as if the global economy might finally be showing small signs of recovery, and when that inevitable upturn starts to strengthen you’ll want to be in the best place to benefit from it. Following the malaise of the last few years there will soon be a period of growth that will leave a lot of money to be made by canny investors, and you’ll want to claim your slice.
The question is this: how the heck can you hope to pick the winners in such an uncertain market? Unless you’re a Warren Buffet type with decades of experience in investment, what chance do you have of taking advantage of the global recovery?
Well, let’s take a look at the top 8 investing tips for any market.
At the top of the bill comes the most important point: start young. The point of any investment strategy is to increase your savings for later life, and the earlier you start the more time you’ll have to build a real nest egg.
The important factor here is compound interest. A steady, long term investment will accrue interest on both the capital and the interest accrued in previous years, so an investment started at the age of 25 that offers even a 1% annual return will add up to serious money by the time you retire.
Don’t invest money you’ll need soon
One of the biggest mistakes you can make (and one that most of us have made at some point) is investing money that you can’t spare long-term. If you’re investing in the stock market you should be wary of locking up funds that you might need in a few months (or even a few years). When the need arises you might find your only option is to cash out your stocks at a loss to free up immediate capital.
Look for matching contributions
Many employers offer to match your investment in retirement plans dollar for dollar, a gesture that can have an enormous impact on your final pension. It isn’t glamorous and you’ll wait years to reap the benefits, but you should never overlook generous opportunities such as these.
Review your portfolio regularly
With a large and diversified portfolio it can be easy to lose track of exactly where your money is, and how it’s performing over the long term. You should review your portfolio at least once a month to make sure your investments are performing as expected. Don’t panic sell a sinking stock, but be aware of long term negative trends if you’re investing over the long term.
Perhaps the most effective way to get a grip on any market is to keep on top of the latest news. If you’re investing in property you should pay attention to legislation and purchasing trends that could affect the value of your investment. For the stock market, pay attention to quarterly reports and sit in on (or at least read the summary of) shareholders’ meetings.
There’s no excuse not to keep up to date with the news if you have money riding on it, and slacking off in this respect will do nothing to help your long term gains.
Don’t take short term risks
In general, most people are more attracted to the excitement of short term gains through day trading and Forex markets than long term investments, and it’s easy to understand why. Gambling is a heck of a lot of fun, and we all love a little shot of adrenaline.
If you’re looking to make money, though, it’s easier to do it over the mid- to long-term. Most day traders lose money, and you rarely meet a gambler who makes a living from it. Resist the urge to take short term risks if you don’t want to expose yourself to big losses.
They say you shouldn’t put all your eggs in one basket, and that maxim holds true in the world of investment. A focused portfolio can offer great gains if you get lucky, but if you throw everything into a single investment you may lose it all with just one piece of bad luck.
The safest portfolio is broad and diverse. If one investment begins to flag you’ll have many more making gains, and as the economy grows as a whole a diverse portfolio will usually grow at a similar pace.
Don’t act on impulse
Finally, you should never make a split-second decision on an investment. Going with your gut is a terrible long term strategy, and very few successful investors make a living without reams of data to back up their decisions.
The key to successful investing is to learn about the market. Study past performance until you feel you can make an educated guess about future trends. It ain’t perfect, but it’s the safest way to keep your investments growing.
Damian Wolf is a blogger and online entrepreneur. He currently works on investment property advice project. Damian specialized creation of advanced online marketing tactics & visibility improvement tips.
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