Although the straightforward fact of investing is that there is risk, wouldn’t it be wonderful to have great investing success without any risk?
However, this risk can be minimized with a plan, knowledge, and experience over time, and the end result is a very effective way to achieve your financial goals.
The kind of plan you should use really depends on what works best for you. You might prefer an aggressive strategy with potential higher returns but higher risk, or you might prefer a less aggressive strategy with lower returns but higher risk, or something in between. You could also prefer investments that mostly take care of themselves and only require occasional attention, or you could prefer to be more involved in your investments and always know exactly what your money is doing. While there is no real investment strategy or secret, these straightforward advice may contribute to your success.
Tip 1: Goal setting is a very effective investment strategy because it provides you with the means to set a goal, gives you direction, and helps you get motivated to do the things you need to do to get the result you want. Setting motivating goals is completely up to personal preference. You might be motivated to have 20 investment properties in your portfolio or to make enough money back from your investments to buy a luxury yacht. There is no right or wrong goal; all that matters is that it motivates you, gives you something to aim for, and gives you direction.
Tip 2: Do Your Homework Due to the potential risk associated with any investment, it is essential to complete your homework. You wouldn’t go to a car lot without a specific car in mind and buy the first one you see; rather, you would do your research first, right? For instance, you would have established some criteria, and you might be looking for a car that meets all of your requirements—it should be dependable, perform well, and appeal to you. The same is true when it comes to investing: you probably won’t get the best results by investing in the first shares or properties you see. Doing your homework on the stock market may involve looking up press releases or news articles about a company you are interested in and examining the stock price’s history. For a property, you could investigate the neighborhood, determine the previous sale price, and have building and pest inspections performed. You can do a lot to ensure that you are making a good investment decision; if you do your research, you will do better than most people.
Tip 3: Invest on a regular basis Investing is not a scheme to get rich quick. To be truly successful, you must invest on a regular basis. Getting into the habit of regularly adding to your investments and putting the money where it can do the most good for you is the best way to build wealth that can be measured. If you put $10,000 into a share account and get a return of 20% on average every year, in ten years you may have earned $2,000 per year, but you will only have $10,000 in that account after account keeping fees, inflation, tax, and other losses, resulting in a total wealth of $30,000 However, if you reinvest that $2,000 annually, you will have a total net worth of approximately $62,000 in ten years. That’s $62,000 in your share account right now, which could earn you $12,400 per year at 20% interest, as opposed to the $2,000 you’d still be earning in the other scenario. While this may not include losses in either scenario, the goal is to emphasize the advantages of regularly recharging your investments.
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