Ten Useful Tips for Wealth Investing
People usually have just two reasons for investing - to protect their money, and to make it grow. To that end, we have ten useful tips to remember when it comes to wealth investing.
- Don't invest more than you can afford to lose
People hate hearing this, but there are no guarantees when it comes to wealth investing. One of the reasons that the crash of 1929 affected so many people the way it did is because not only did they invest everything they had in the stock market, but some also borrowed money to purchase stocks. When the market crashed, they were not only broke but in debt as well. Today there are no more guarantees of how the market will work than there were back then.
- Don't get greedy
This is a common mistake when it comes to wealth investing. We all wish we could find that magic stock that doubles in value every week, but if such a thing existed, everyone would be rich. While you do want to put some of your investment in higher risk, therefore higher reward stocks, don't let your greed overwhelm your common sense either.
- Keep some funds liquid
Unfortunately some people have made the mistake of tying up all their funds in their wealth investing plans, and when they needed something for an emergency - unexpected job loss, illness, and so on - they're left without those emergency funds at their fingertips.
- Balance your portfolio with a purpose
What this means is that you need to choose which stocks actually balance your portfolio, not just choose a hodgepodge of stocks that you think will do well. The key to wealth investing is to have a selection of stocks that will offset one another - when one goes down, another should go up. This calls for careful selection and planning.
- Learn all you can to make the best decisions
Sure, you might have a financial advisor that you think you're paying to do this for you, but ultimately you need to make the final decisions about where your money is going to go. He or she may have more knowledge and experience than you, and it's good when it comes to wealth investing to listen to their advice, but this doesn't mean you have no say in your plans either. Read up on current stock offerings and other investment strategies.
- Don't put it all in stocks
Typically speaking, stocks are the riskiest investment. When it comes to true wealth investing for the long-term, you want to spread out your strategy. This too is part of a balanced portfolio. Purchase CDs and mutual funds, and keep some money in money market accounts as well.
- Ride out the rough times
It's so tempting for those new to wealth investing to immediately dump stocks, sometimes even their entire portfolio, when the market takes a downturn. Remember, when stock prices fall this means that you can now buy cheaply. Selling your devalued stocks now might not make much sense. Be patient and ride out the market and you'll get a better return.
- Make decisions based on your own financial goals
Your financial goals will depend on your income, your financial needs, your age, and many other factors. The key to successful wealth investing for you is to make decisions based on your own particular goals and circumstances - building a portfolio is not a cookie cutter option; what works for one person may or may not be appropriate for you.
- Review and update your portfolio regularly
It's unfortunate how many people plan their wealth investing options the first time they meet with a financial counselor, and then never give them a second thought. As your circumstances in life change, so should your strategies and investments.
- Be smart
What does this mean? Simply that you need to be practical, informed, and reasonable when it comes to your plans for wealth investing. If you do this, then not only will you safeguard your money but you'll be able to build it up as well.
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