Buy low, sell high right? What else is there to know?
Investing can come in many forms or fashions – from investing in your 401(k) plan, to having a brokerage account, to day trading in stocks, or a buy and hold strategy in Mutual Funds and ETFs, there’s no one-size fits all when it comes to investing. Growing your money is all about your goals, your risk tolerance and making decisions based on your personal situation.
But are there any rules that apply to all investors when acquiring wealth? Sure there are, here are the top 3 rules to making money with investments.
Timing the market is risky and can lead to underperformance. Rather than timing the market, spend time invested in the market. Add to your investment account regularly throughout the year and those additions, along with compound interest, will help you grow your assts over time.
Take appropriate risk
Taking the right amount of risk is paramount to investing. If you take on too little risk, then you may not see the returns you were hoping to achieve, or you may not even keep up with the rising cost of inflation. On the flip side, if you take on too much risk, you may see drastic swings in your portfolio and may be uncomfortable with the volatility. Understanding the risk of your portfolio, how different market cycles can affect it and what your response would be in a given situation makes it more likely to set and meet personal financial goals.
Keep the Long Term in Mind
Investing to build wealth should be a long term approach. Day trading and other “get rich quick schemes” are dangerous and can pose a great risk of losing many or all of your investable assets. Instead of looking for the “next Tesla stock” to get in on before everyone knows it, define your goals, figure out your timeframe, and find investments that are suitable and will serve you in the long term. Don’t risk all of your hard earned money on impulsive market decisions.
While no one can give blanket advice when it comes to investing in the market, following these three rules will help you focus on long term growth and tune out the noise of short term volatility.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.