How to Invest, some basic strategies
It’s a universally accepted fact that money pulls money. And for that fact to come true, one must invest. However, money matters aren’t easy matters. Taking financial decisions can be unnerving. Because plenty of questions need to be answered first – so many promise returns, whom to trust? So many lucrative-sounding options, which to chose? So many risks, how many are negatable? So many conditions, are some not skippable? For the education of all our first timers out there, let’s take this time to try and understand how to go about investing. After all, no one likes their money parked idle, too.
• You’re not going to become a millionaire overnight. It’s a long innings to play: It’s the most basic thing about investing. This isn’t for those seeking slam-bang gains. Not the legal way, at least. Getting your money to work for you needs both time and patience. For instance, when Amazon went public in 1997, its shares were at $18. Today, each share weighs close to $580. Surely, there were many who must have trusted the company and invested in it, making millions over time. Of course, not all time frames are this long. And not all investments are this fruitful, too. The market plays the main or the negative protagonist here with its ebb and flows. The average time course for fruition is 3 to 5 years. All in all, don’t get into it if you’re looking for a quick fortune. Do it if you believe in ‘good things come to those who wait.’
• Knowledge acquired through training < knowledge gained through experience: This isn’t belittling portfolio managers, financial planner and financial analysts. There will be those in the industry who’ve been there for donkey’s years and seen some major ups and downs. They’re still dealing with someone else’s money. And for their own profits. It’s easier to hide behind the market when you’re doing that. On the flipside, those who’ve toiled the years sitting among the market people and gained their expertise on when to invest and when to pull out by falling and rising up themselves are better judges of opportunities. If you know someone in person who’s been there and done that, do consult him or her before beginning. They know what it feels like to lose hard-earned money and the joys of fulfillment, too. Hence, the advice coming from their acumen is true value for money. What’s the ideal amount to get started with, where are good gains expected from and what should be the tenure of investment. Mine this information from their heads and you’re good to go.
• Get a feel of it before doing the real thing: Ok, so you now know you’re in it for the long run and are equipped with sufficient first-hand knowledge from seasoned investors. Put it to test with virtual reality. They say practice makes a man perfect. Websites like moneycontrol and investopedia offer stock simulator games. All you need to do is decide your stakes. Since the monetary risk is null, you can brush up your skills here sharply and carefree. Do all the experiments you want to with picking up stocks and offloading them. Play as high stakes as you feel like.
Get your hands real dirty. Once you’re confident enough that you’ve learned ample tricks of the trade, initiate real world trading. Be careful not to go big from the start, though. Sometimes, market behavior can be more volatile in the real world window. Begin small and scale up gradually. So, are you ready to make your move on the market?
