Stagnant money is of no use. Over time, your cash inflows need to keep up with factors like inflation so that the money you save now will be worth something in the future. One of the best ways to do this is to invest money in the share market.
A recent report published in Forbes, found that 43% of the millennials who are ready to invest their capital, would prefer to stay away from the stock market. So, if you consider yourself to be a completely conservative investor, but are still looking at ways to expand your income, here are a few pointers that can help you out.
There is more than one type of investment
Firstly, it’s all about preparation and analyzing companies that fit your financial goals and objectives. You may be looking at growth, income or both. Do not jump at the first thing you see. Rather read, observe, and learn. Learn the difference between a stock, a bond, an option, and all the various other products that are traded. You want to ensure your strategy is consistent with your goals and the results you are seeking are also consistent.
Fictional moves and social media will give you the idea that you need to be a wolf-like character to beat the market and become rich overnight. That does not work in real life. Do not enter with the idea that you will beat the market every single time – though you can beat the market over time. What you want to do is be immersed in the market, the companies you have within your portfolio and the industries they are in. A good portfolio of stocks can create a situation where you reach consistency with income, whilst also attaining and preserving your capital.
Understand what you are doing
Keep it simple and do not opt for complicated investments that you don’t understand. Just because you have heard of specific strategies where people have made money, you need to understand the metrics behind these strategies – everyone will tell you a good story, so from the outset focus on the business and the opportunity you may see within them.
Why Diversification is Important
Warren Buffet famously said that you should ‘never put all your eggs in one basket’. Seek to diversify your portfolio. Create a portfolio that will keep your risks at a minimum. It’s not just about growing the portfolio, but also minimizing your losses when the market is not doing as well. Rebalancing and reweighting of your portfolio are just a few actions that would be required from time to time.
One of the most important aspects you need to remember about investing in the share market is that there are some inherent risks that come with it. But by not risking is a risk in itself. You must put in the time to educate yourself and understand the fundamentals and technical analysis that is required.
Get the advice
It’s all about pricing and timing. If you are ad-hoc in your approach and rely on sparse information, then you will not see the results you were wanting to achieve. You must be realistic in your approach, so if you need to obtain the right advice, then establish a relationship with a firm that can provide you with all the above.