Monday, November 27, 2006

How To Avoid Mistakes When Investing In Shares





The promise of making a lot of money has been heard by many,
and many have found out that it just is not as easy as they had
heard. They lost money - sometimes a lot of it. They then turned
away from the stock market and ended up totally disillusioned
about it. The truth is, they may have been somewhat confused
about it in the first place. They may have thought it would
come to them just like it did to others - without knowing the
why's or the how's. Here are some strategies that you can use
in order to help you to avoid the common mistakes that others
have made.

Get A Realistic View

By looking at the market with your eyes open, you can come to
understand not only the profit possibilities, but also the
possibility of losses. The truth is that the higher the
possible gain there is, that it is always associated with the
increased likelihood of loss. The safer investments always
bring a lower level of profit, and the safest investments have
attached to them the lowest levels of profit.

Understand The Market

One of the greatest benefits that you can have to help you
avoid a lot of potential pitfalls in your investments is to
understand the principles of investing. In other words, read
all you can about the process, how to judge a good stock, etc.
The more you know about it yourself, the wiser you will be able
to invest your funds - and hopefully see a profit. You will also
be able to develop a worthwhile investment strategy - both for
the short term and for the long term.

Diversify

It is smart investing to place your available investment funds
into a minimum of 6 different kinds of shares. Some suggest
that you go as many as 20 in order to diversify safely. Spread
your investments into different kinds of stock (sectors) that
are not related. This way if one type of market does not do
well, then the other ones should. This enables you to still
make money from some of your investment.

It is usually a good idea to diversify into more than just the
stock market - at least until you really understand what you
are doing. The smart investor will take a portion of their
investment money and put a percentage of it into secure
investments like trust funds which are solid investments, and
possibly also bonds, which are the most secure, but do provide
less interest.

Seek Counsel From Professionals

Unless you have money to just throw away, it would be a real
good idea to seek help from someone who understands the market
better than you do. There are professionals out there,
financial advisors, brokers, etc., that are more than willing
to help you build a solid portfolio for your investments. Their
expertise can spare you a lot of unnecessary loss, and get you
on to the right track to some solid profit.

Make Your Investments For The Long Term

While there is different thinking about the markets and how to
invest, the general idea is to make your investments for the
long term. Experienced stock market experts tend not to watch
the market everyday, but only check on it once a month and many
of them only quarterly. Watching it everyday leads to a lot of
anxiety - since the market normally fluctuates a lot from day
to day. Overall, though, it generally moves upward.


About The Author: Joe Kenny writes for the UK personal finance
sites http://www.ukpersonalloanstore.co.uk and also
http://www.cardguide.co.uk

Please use the HTML version of this article at:
http://www.isnare.com/html.php?aid=99076



For more free-reprint articles by Joseph Kenny please visit:
http://www.isnare.com/?s=author&a=Joseph+Kenny

No comments: