Three Things You Need to Know About DIY Investing
Do it yourself investing is something everyone wants to do, but most people are scared of. It requires a lot of research, meticulous planning and, most importantly, understanding the way the investment market works. If you are DIY investing for the first time in your life, do as much research as possible, remember to follow some basic principles and seek professional advice when necessary. Here some aspects of investment you should consider before investing for the very first time:
1. Learn to diversify
When investing, it’s absolutely crucial to diversify. When you are developing your investment strategy, make sure you invest in a wide range of assets instead of just shares or just property. Purchase stocks, bonds, gold, and property. Investing in a variety of assets will keep your money safe and help you get the maximum return.
If you are investing in the property market, you should invest in different types of properties that are expected to grow in value over different time periods. This way you will not lose everything because of a sudden short-term property market crash.
2. Know your costs
The deadliest of mistakes newbie DIY investors make is that their investment starts costing more to them than the expected return. As a result, investment becomes pointless. That’s why you need to know how much tax you will pay on your investment, how much your broker will charge you, and estimate the inflation rates. Inflation is usually the biggest and most merciless profit killer. If you have difficulty estimating your costs, you should either seek professional advice or refrain from investing at that point in time.
3. Never buy "hot stock of the year"
Each year, the financial publications around the world publish a list of what is commonly known as "hot stocks". Whatever you do, don’t fall into the trap and rush to buy these assets. You are almost certain to lose money. Why you should never buy "hot stocks"? Quite simple - the publicity pushes their price sky high, which means that the return won’t be worth the effort. Instead of following the crowd, use your own analysis and intuition to find the best things to invest in. Generally speaking, investing in private equity companies generates a good return, provided you manage the risks.
So, now you know what to consider and what to watch out for when investing for the first time. To become a successful DIY investor, remember to stay calm, diversify, and use of the best financial adviser in the world - your common sense.
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