Investing is not a game. Not for the weak hearted. Stock markets move up and down. One cannot just predict the market. Not possible to predict its movement. Hence cannot time it’s up and down. One can build a solid portfolio so as to possibly succeed. Few considerations to keep in mind.
Invest with a goal in mind – As discussed in one of the point, the purpose of investing should be kept in mind. Even before starting with the investment. One should know what it will cost to achieve that purpose. Purpose shows the path to investment. Always correcting it when invest is going off the path. Yogi Berra, a wise baseball philosopher sums up “If you don’t know where you’re going, you’ll miss it every time.”
Your present situation and risk you can take – What is the financial position today? How much one has earned and how much one has saved till date. In future date what will be the need. How much earning should be there so as to save enough amount to fulfill the required goal.
If the savings is insufficient then that saving should be channelized for investment. Then the amount will increase in the shorter period. When investment comes into picture the topic of risk arises.
All investment carries risk. The level may vary from type of investment. One extreme is high-risk takers and another extreme is risk-averse. This depends upon nature of the individual and the circumstances.
With risk comes the reward. High risk, high rewards. Low risk, low rewards. Usually, individuals take the middle path. Medium risk and medium rewards. One can take help of the best share tip provider to ease the situation.
Purpose – There should a definite purpose or goal for investment. It should personal one like a holiday abroad or buying a home or marriage or education or retirement or anything. Once the purpose or goal is set, next is setting the time to achieve it. It can be a week or month or a year or a decade.
Example, going for a holiday trip to Europe next summer. Here the purpose is holiday trip. Time duration is 2 years. What you want to do and when. Get nifty future tips, two-day free trial.
Quality, not quantity – For the long term, it is the quality which lasts, not quantity. Whatever be the components of your portfolio, see that it maintains quality. Because one’s holdings are critically important.
Diversified investment – The portfolio should not be put up in a haphazard manner. It should be put up with proper planning. It should be put up after considering the fundamental and technical’s of the securities.
The portfolio should be diverse across sectors (IT, banks), caps (small, mid, large) industries (cement, mining, pharma), bonds, fixed deposit, provident funds, precious metals and stones (gold, diamond), MFs, real estate, geographical regions, commodities tips etc.
Here risk tolerance of the investor should also be taken into account. Certain investments are risky in short terms but are not risky in long term. There are many share market advisory company who can calculate the risk associated.
In shares, one should look for cash flow, product, profits, dividend history, management, place of among peers, etc of the company.
Current market shares may be expensive or cheap, which depends upon present political environment, demand and supply, etc. Buy only quality ‘A’ listed shares.
Today’s marketplace is competitive, especially as the traditional system takes a backseat to the global economy. Practices such as international money exchange, offshore investments, and outsourcing opportunities are constantly changing the financial landscape- some for the better, and others for the worse. But there are still opportunities, right?
In the recent past, most of us have turned to financial institutions, such as banks and credit unions, to manage our money. However, conventional investment opportunities are becoming outdated as distrust for lending institutions has grown alongside interest rates and bankruptcy filings. So, how do you know who to trust and where to invest your hard-earned money?
While most financial advisors are still pushing long-term investments, short-term are undoubtedly the most sought after- and with good reason. Investing a small amount of money in a short-term investment can produce a high-yield in just a short time, but it can also be a quick “game over” for the unprepared investor. That’s why we’ve prepared a few tips for the short-term investor; a bit of due diligence to help you avoid common mistakes and save you from losing your shirt.
Do Your Homework
An effective investment requires thorough research, including the collection of data concerning the market, the company and/or project you’re investing with, and the feasibility of that company and/or project being successful. Before you dive into an investment opportunity that looks “too good to be true”, remember that sometimes those opportunities are too good to be true.
One way that you can protect your investment is to research the company or project that you’re supporting. Make sure it is a reputable and legal operation, check reviews, and look for fraud alerts on the internet. Once you are sure everything is legit, make sure the opportunity is one that has a high chance of success and you’re on the right track.
Don’t Be a Hero
The global marketplace is crawling with innovative ideas, especially when it comes to technology. Crowdfunding has changed the way people view, find, and support projects however not every innovative project is a success. History repeats itself for a reason and sometimes, trending investments are short-lived.
Be wary of investment opportunities that claim to have a high-return in a short-period of time. They may have the possibility of yielding a high-return, but they also have the possibility of instant bankruptcy for the entrepreneur who has nothing to lose. And, you don’t want your investment listed on the bankruptcy roster.
Follow the Money
Where there is already a steady cash-flow, there is bound to be more. Of course, this is not always true and businesses do occasionally take a turn for the worst, but for the most part, a business with revolving capital and assets is less likely to take a dive. So, if you see a good investment opportunity with a stable company, chances are they are running a short-term campaign for a special project using your investment. This is a win-win situation because they want to fund something that they know will make money while you benefit from their success.
The volatility that we recently experienced in the market is very troubling to some investors. Unfortunately, those investors who hit the panic button and sold off are recognizing large losses in their portfolios only to turn to investments that are perceived as safer places to invest.
The fact of the matter is that we invest our money to earn long-term rates of return that will exceed the rate of inflation and help us preserve our purchasing power. Historically, cash has been the worst place to invest over the long term.
Losing Investment Capital in a Volatile Market
According to Fidelity Investments, investors who sold their 401(k) holdings while the market was crashing between October 2017 and March 2018, and then stayed on the sidelines, have only seen their account values increase by about 2%, including contributions, through June of 2019. This compares with those who held on and saw account balances bounce back by around 50%. During periods of extreme volatility, wealth managers will often tell clients to stay invested rather than sell and lock in large losses in a seesaw market.
Building confidence in your strategy is a way to keep from making the mistake of buying high and selling low. Having the mental conviction to tell yourself that you have a carefully planned portfolio of high quality investments goes a long way toward getting through the toughest days of market volatility. If you are unsure of how to select high quality investments, consult with an financial manager or registered investment advisor.
The question is; how do you reach that state of mind? It’s not easy if you are the type of person that tends to get knots in your stomach when the market drops. We outline some steps below that might be able to increase your level of confidence.
Conquering the Fear of Volatility
One step you should take to better handle volatility is to make sure you have adequate cash reserves for a financial emergency that might arise. This way you are not depending on your portfolio for unforeseen expenses and your anxiety level will be lower, knowing that you don’t need to sell your investments when they have declined in value.
Make sure you have a mix of investments that fits in to your risk tolerance and time frame. This can be accomplished by considering how you have felt when past market declines have occurred. Your wealth management advisor should be able to provide you with a thought provoking questionnaire that will give you a score when completed. The score on the questionnaire will have a corresponding asset allocation that you can use to determine the split you will have between stocks, bonds and cash.
Once your allocation has been determined, stick with it. It is a good practice to reallocate your assets on a regular basis to keep your risk level the same. This means that a portion of those investments with better performance will be sold (sell high) to purchase in order to purchase shares in those that have not performed as well (buy low).
Other ways to hedge volatility can be through the use of options. Two simple strategies can be applied. One is the sale of covered call options against underlying stock or ETF positions. In this strategy you (the seller of the option) collect money from a speculator (the buyer of the option) in exchange for an agreement to sell your stock only if it reaches a specified price (higher than where it trades at the time of the transaction). The option must hit the price target (strike price) within a predetermined time frame (expiration date). If it does not, the contract expires you keep the money paid and are free to sell more options against that stock position.
The other strategy is to simply buy a put option. This gives you the right to sell your position in a stock or ETF that you own at a predetermined price within a predetermined time frame. For this privilege you will pay money (a premium) to the potential buyer (seller of the put option) of your stock. This strategy should be implemented in periods of low volatility, as the cost of the transaction will rise as markets begin to fall.
Buy With Conviction
Let’s say you’ve owned a stock that has done well over time. The stock has had a history of increasing revenue, profits and dividend increases. It seems like the stock is usually going up when the market goes up, only now there has been a big selloff in the market, and the stock has dropped dramatically due to market conditions. It may be time to do some homework on the company and make sure that the drop is due to just a generally bad market. If it that turns out to be the case, maybe it is time to buy more of the stock. Great companies often go on sale in market declines, only to have dramatic upturns once the market decline is over.
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Interview an Influencer or Get Interviewed by a High-traffic Website
Have you heard of Tim Ferriss, the author of the Four-Hour Work Week?
His podcast is nowadays a staple content type that he provides to his viewers. Tim’s show has world-class performers who share their insights on a variety of topics, and he is well-liked on social media. Do Tim’s fans enjoy the show? So far, the show has received over 50 million downloads. On most days, it’s the most popular business podcast on iTunes.
Interviews, whether on video or audio, are inherently conversational, lively, and engaging. The great aspect is that it’s a win-win situation for both sides. The interviewer is exposed to a new audience, while the interviewee is able to provide his website visitors with new fascinating and authoritative information. You can ask an industry influencer to share your interview with their followers on social media if you interview them. Consider the organic traffic you’ll get from their social media followers, which number in the hundreds of thousands. Consider the level of interest generated by a prior Derek Sivers interview on the Tim Ferriss Show. Derek shared the show’s URL with his 283K followers on Twitter. It won’t hurt if you establish a relationship with the influencer as a result of the interview.
Similarly, being interviewed by a high-ranking website can result in a significant increase in search engine traffic. Harsh Agrawal’s blog, Shoutmeloud, received 35,000+ views in a single day after he was profiled by YourStory. That was the blog’s most popular search engine traffic source (with 600,000+ monthly visitors). Because interviews provide consolidated value, they can be used as a long-term lead generating source for your company. Consider how many bloggers you’ve learned about through interviews on YouTube and other high-authority websites.
You may also conduct a Reddit AMA if you have a very compelling storey to tell. Mateen’s AMA got about generating $85,000 in profit by selling TeeSpring shirts/hoodies received 2000 page views. He also boosted the number of visitors to his website on a daily basis.
By registering as a source with HARO, you can also answer queries from journalists. On HARO, Christopher from Snappa came across this question from Inc Magazine about the future of content marketing. He swiftly responded with a thorough response. He was mentioned in Inc a few weeks later as a result of this. HARO is an excellent strategy to have your brand mentioned on authoritative news sites such as Entrepreneur and Inc. Those backlinks will enhance your search engine traffic and increase your marketing strategy by improving your reputation in Google’s eyes. Contact an SEO agency to find out how you can do this and how they can manage it for you while you work on the bottom line of your business.