We’ve consolidated all the daily investment tips into this massive guide, so you can get the best of advice in one place.
Here are our 6 daily investing tips for every type of investor:
1. Start investing early
The sooner you start investing, the better. Investing early will give your investments more time to grow. Money has time value. Money earns and grows over time. Money grows with the power of compounding. Don’t waste time and start investing today. Remember that the best time to plant a tree was 20 years ago. The second best time to plant a tree is today!
2. Invest for the long term
Investing is designed to be a long-term endeavor. If you want to trade, you do it short term. If you want to invest, you do it for the long term. The holding period of a share can be eternal. Warren Buffet is famous for saying: “I never try to make money on the stock market. I buy on the assumption that they could close the market the next day and not reopen for 10 years.” By this he is saying that he wants to buy good, solid investments that will give long-term results. He ignores short-term fluctuations. Patience is the key to investments. When Buffet buys a stock, he does so with the intention of holding it for life. When you invest in the stock market, he thinks in the long term and not in the quick profit through trading.
3. Invest in high-quality growth companies
There are two main investment styles: value and growth. A growth investor focuses on companies that are poised to grow over time. One of the most famous growth companies in history is Apple. Others are Google and Amazon. They are companies that have grown over time. The trick for investors is to find these companies when they are still babies. Choose companies that offer strong brand names with competitive advantages. Many of the most successful growth companies are those that redefine industries or create new ones. However, remember that growth businesses come with risks, so be forewarned.
4. Diversify, but not too much
It is essential that you diversify your portfolio – it is one of the best ways to ensure that your portfolio grows with the market over time. You should diversify across different asset classes. Diversify but don’t overdiversify into the same asset class, which often negates all potential gains.
A good example is owning a stock like Apple, but also owning the NASDAQ 100 Index. Apple makes up a big chunk of that index fund, so you’re not really diversified (plus, the NASDAQ is mostly tech, like Apple). Invest in different asset classes such as stocks, bonds, mutual funds, bank deposits, gold, currencies, options, real estate and other instruments.
Another good example of diversification is to allocate as little as 5-10% of your assets to high-risk investment strategies like binary options. Learn more about binary options, a sophisticated investment method that has recently gained popularity as a means for investors to diversify their portfolios, by visiting this binary trading website.
5. Don’t lose sight of value
Growth investing is fun, but value investing is where many of the most successful investors made their money. Focus on value investing in companies that have strong fundamentals. Look for the companies that are worth more than their market value, invest in them and keep the investment for the long term.
Benjamin Graham, known as the father of value investing (and Warren Buffett’s mentor) and one of the top 10 investors of all time, says that over the long term, company performance and stock price tend to be coincide. So he takes advantage of short-term fluctuations or bad news, and uses that for long-term profit.
6. Investing is NOT gambling
One of the biggest mistakes outsiders make is thinking that every investment is gambling or speculation. No, it is not. But unsuspecting investors can treat it like one and they will fail. Avoid making investment decisions based on predictions of short-term market movements, rumors and gossip. Fisher, a great investor, warns that buying a company without knowing enough about it can be dangerous. We have to do homework. He has to think of every investment he makes as if he personally invested as the owner of the company. Would you buy the company if it were a local business? Think of it like this and invest, don’t bet.