Investment! When do you think is the best time to start making investments? I’ll say, “Right Now”! Investing from an early age provides you the paramount chance to compound and nurture your money. It is that time when you should be learning about some investment strategies that would last for a lifetime.
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Investment Strategies you need to follow
Begin to Invest as Early as Possible
The more time your money shall have to stay invested, the more it will compound due the course. Investors who begin their investment early, exercise patience and stick to a long-term investing plan time and again see the best returns and success financially. For example: Person X puts $1,000 into a retirement account from age 20, and then stops doing so, remains ahead the person Y who starts at age 30 and invests $1,000 a year for 35 years. Suppose a 7 percent average annual return is earned by both the investors, X will have $168,515 by 65 years of age, and person Y will have $147,914.
Invest Your Money in what you understand
Build an understanding of the business where you’re investing into, this way you’ll be able to decide on to the news if it is going to benefit/destroy your investment strategies.
Make your Investment Emotion-Proof
Emotions are said to be poisonous to investment. It’s a general tendency of a human being to feel painful while losing on their hard earned money and feel delightful on making profits on the same. Experts say don’t lose your heart if your stock price comes down from the number you had bought the stock at, in fact try averaging out the buying price (if you really believe in the company’s fundamentals that it’ll certainly grow in long run) by buying more of the same stock at a lowered price. And, when the price rises to its ever time high, you feel elated. So always do the “Cost Averaging”.
Filter out the Noise around You
With the technology enhancement and smartphones’ reach in everybody’s hand the information is spread faster than anything. And mostly these information are too much, which makes the person more emotional towards their decisions. But as an investor one should ask these questions to themselves: Why am I purchasing? When will I sell this? What are my parameters for purchasing this investment? One should ensure that buying a stock is not an impulse buying but a thoughtful decision altogether.
Diversification is the Key
It’s always said not to put all the eggs in one basket, same applies in investment as well. Diversifying through the different asset courses as well as inside asset courses is a smart way to go about bringing diversification in your investing profile. For instance, equities are available in different relishes when it comes to its features such as market capitalization: Large Cap/ Mid Cap/ Low Cap etc.
One needs to define their own investment strategies to stay on the top of their game. But, these are few simple and non-negotiable points when it comes to investing and are always helpful for any investor for their entire life.
This article contributed by Vikas Agarwal is an IIT-Varanasi graduate in Chemical Engineering. He is the Founder and CEO of Finaacle.com – an investment advisory website. He is a Business Development Professional but a Value Investor at heart. He writes articles on Finaacle, which focus on simplifying the art of investing and the causes of human misjudgment when it comes to investing. He also shares his experiences as an investor and lessons from some of the greatest investors of all time.