Investment Tip | Top 10 Timeless Investing Tips To Become A Successful Investor
This legendary quote from a stock market legend means that during periods of strong economic growth, you cannot tell which companies have poor financial condition or governance because there is a general uptrend in the market and prices rise.
However, during volatile market conditions or economic turmoil, you can find these companies and stocks falling drastically in the blink of an eye. So, if you are wondering how to become a successful investor who can survive these types of investments, here are some timeless investment tips for you.
The Concept of Time
The first tip is about timing the stock market, not how you want to time the market. Often investors want to get exponential returns within a short period of time. There are also misconceptions about stock market investments such as money doubling in a few months, which is still prevalent in many parts of the country. However, the real factor in getting a good return on your investment is how much time you spend in the market or how long you invest.
Learn to Diversify
Diversification is the key and it may seem cliché to most the ears but still, diversification is one of the primary things to consider while investing in the stock market.So you need to diversify to optimise your returns and minimise your risks.
Understand the implication of cycles
You have to go against the cycle to get great returns. Suppose you are investing in a company that manufactures winter wear, the company’s revenue will increase during winter, so will the share price. But if you want to earn above average profit, you need to invest in this stock, when the revenue is low. There is and so is the share price.
Guard your emotions
You should be invested in your investments but it not emotionally. This is a rule of investing that you should never let your emotion cloud your investing judgment or logical thinking.
The art of rebalancing
If your asset allocation is disrupted due to market movements, your portfolio is rebalanced. This will help you maintain your ideal asset allocation in all market conditions.
Know the difference between news and views
While listening and reading daily news is important, investing solely on the news can be gruesome. You need to recheck and analyze the effect on your investment thoroughly before taking of any step.
Corrections are normal
It is natural for market corrections to happen, investors should be patient enough to see if it is a normal correction where stock prices go up and down. If the change is more than usual, then maybe a big event is around the corner.
Make learning a constant habit
Continuous learning is another good habit of successful investors. Whether you read economic news, journals, stock analysis reports or even financial blogs, the more you learn, the better your investment skills can become.
Analyse the risk potential
You have also invested in shares. The company fails, and you lose the money you invested.for example your friend’s monthly income is Rs.1.5 lakh and you have Rs. 50000. So, the loss will not affect your friend as much as it does you. Investment is a personal thing, while you can discuss it with your friends and family but investing according to their plan is never a right choice. You need to analyze your earnings, risk taking capacity and investment goals.
What successful investors do is not follow the herd mentality and invest when prices are high and sell when prices are going low. They analyze, observe and invest even if it is against market timing. While investing has become easier with the advent of technology in the field of investment. However, these above rules of investment have not gone out of the market. Even when the market becomes volatile, following these rules helps every investor and also helps them succeed.