While the stock market is riddled with uncertainties, certain tried-and true principles can help boost your chances to long-term success.
Investors should first define their financial goals. For instance, saving for retirement, buying a house, or funding the education of your children. This will help them determine how much money to put in and what type of investment is best for their needs.
Making a priority of building an emergency fund or paying off loans with high interest prior to investing in the market is an excellent option. If you do have funds to invest in the market, begin with a small amount and gradually increase your investment as you gain experience.
One of the biggest mistakes beginners make is trying to predict the market, Keady says. Keady says that nobody knows when is the best time to invest.
If you’re just beginning, it’s a good idea to concentrate on stocks from companies that you understand. Peter Lynch, the legendary Fidelity Magellan Fund manager, once stated that you have better odds of success when you invest in companies that have a proven performance and growth prospects.
Avoid online forums and adverts that promote stocks that have a high chance of success. In many cases, they are part of a scheme known as a pump and dump where unscrupulous people buy shares of a barely traded company to drive up the price and then dump their shares to make money.
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