How To Invest - Simple Tips - Invest in something that's currently turning a good net profit.
- Invest in companies that were set up over ten years ago.
- Don't gamble on what might give a good return in the future.
- Don't invest in something you don't understand.
Companies hide liabilities. They use 'creative accounting'. Ask: - Are they cash-rich?
- Do they make a nice profit after tax?
- Are they doing well now?
- What debts and liabilities do they have?
1. Diversify
"Don't put all your eggs in one basket" . Don't put all your money in one stock. Also, buy bonds and stocks. Don't pick only one type of investment.
2. Do Your Research
Obtain and analyse as much information as possible before plonking your money down.
3. Set Limits
Determine the high target price or low stop-loss price at which you're willing to sell.
4. Go For Value
Undervalued stocks will get you the most growth. Look for bonds of solid companies that are out of favour too. They should be selling at a discount.
5. Overall growth is meaningless
What truly counts, is the per share growth.
6. Don’t pay for hope
If your strategy depends on long term above-average rates of growth, you'll be skating on thin ice. Eventually, it'll crack!
7. Risk and reward are not always correlated.
The smaller the risk does not necessarily imply a smaller potential reward. The greater the risk does not necessarily imply a greater reward.
8. Don't Gamble With Money You Can't Afford To Lose.
Be more conservative, the poorer you are, or the more likely an investment is to wipe you out.
9. Don't Be Greedy
Don't expect your broker to recommend you buy stocks that will double in value quickly. If you do have a stock that goes up considerably i.e. 50% or more, sell it!
10. Invest For The Long-Term
Company stock prices will fluctuate, sometimes unfavourably, in the short-term. Invest for the long-term.
11. Avoid Acting On Impulse
Stick to your strategy. Don't buy a stock on a rumour; you'll get beaten 90% of the time.
12. Tax Planning Is Important
Consider income-splitting techniques. (Ask your investment advisor).
13. Get Professional Help
If you're a newbie, hire the best pro help you can afford. Their advice will likely pay for itself within a short period of time. Once you become used to the game, do the research yourself. Later on, switch to an online broker.
14. Admit sometimes that you don't understand. This is the beginning of wisdom. Don't buy something you don’t understand.
15. Avoid managements of dubious integrity.
It's usually a mistake to go into business with crooks, never mind the Karmic consequences.
16. Ignore short-term fluctuations.
To allow yourself to become perplexed by these movements is to become emotionally tormented by mistakes in other peoples' judgment!
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