Investing is a good way to grow your extra cash. But even the safest investments, from government-backed Treasury bonds to dividend-paying stocks, can bleed your accounts and burn through your retirement nest egg. Whether you’re a novice investor looking to try out the stock market or an experienced one brushing up on fundamentals, read on further as we discuss five investing tips that will keep your money safe while giving it the opportunity to grow.
Buy What You Understand
If you haven’t heard of company XYZ until this morning when its stock price shot up to 300 percent, you probably shouldn’t be buying into it without having a solid understanding of its products and services. Only buy companies whose products you’ve already used before or whose services you easily understand. For instance, everyone uses laundry detergent, and majority of households use Tide as their main laundry detergent brand, so why not use Procter and Gamble?
Get a Good Broker
Investing is a long-term venture, and partnering with an unreliable and unfair brokerage firm to buy and sell your assets can put a huge dent on your account over time. You’ll want to partner with a broker who is financially solid, has reliable customer service, and can execute your orders instantaneously.
Don’t Be Afraid to Stay on the Sidelines
Draw a clear line between investing and trading. As Real Investment Advice points out, investing quickly becomes addictive for most people, especially beginners. The thought of not having a position while markets are active is simply unacceptable. You adopt this mindset wherein you have to always be using your available capital otherwise you’re missing out. This mindset can lead to a higher degree of risk over time, and one that will ultimately lose you your entire investment account. If there are no clear signals to enter the market, stay on the sidelines.
IRA is also an Investment
Self-directed IRAs are as equally profitable as investing in cryptos, bonds, or stocks. Unfortunately, many people ignore the growth potential of a self-directed IRA for the more obvious investment portfolio picks. According to Accuplan IRAs, one reason may be that few IRA custodians permit direct ownership of real estate or other non-traditional investments in an IRA, so investing in a self-directed IRA LLC is usually the only choice. Nonetheless, self-directed individual retirement accounts are a great alternative for growing your savings by allowing you to invest your tax-protected retirement cash.
Regardless of what financial asset or strategy you focus on, practice sound risk management techniques to minimize portfolio risk. This includes setting a stop loss for every position taken to limit the losses on bad picks.
Investing takes discipline, fortitude, and patience to successfully manage. Follow the five tips mentioned above to protect your capital while, at the same time, capitalizing on opportunities to make money.