Confessions of an Investaholic
Thank you very much for this opportunity to share my experience with you. Having spent thousands of hours in the investment world, I noticed that most people are in a “spell” thinking they could only win!
I hope this will enlighten the readers to develop an informed mindset and establish a realistic expectation on their investment journey. More importantly, are they ready to invest? And are they willing to spend time to learn the essential investment skills and attitude so that they are in a position to make a sensible investment decision?
This article has been designed using resources from StoryBoard That.
Are you baffled by investing? This article is about
- how to get started with an investment plan
- how to minimize risk when making investment decisions
- how to avoid the common investing mistakes
- how to become an informed investor based on your risk appetite
About the Creator
Who am I?
It might be the hardest part, but it’s worth the time and efforts to develop an investment strategy or plan before placing your first trade. Investing strategy is a powerful way to grow your investment portfolio. But without an effective investment strategy behind it, your portfolio will never take off at the right foot. Sadly, many investors never bother with a strategy. They start investing without much thought and certainly no profit target and stop loss on their trades.
Start creating your strategy as you read the following steps.
Step 1: Start with Your Goals
Step 2: Choose Your Investment Types
Step 3: Create a Schedule with Potential Investment Ideas
Step 4: Measure Your Results
A strategy is no good if you don’t measure its results, so it is critical to evaluate your portfolio’s performance regularly. Only then can you optimize to improve your future investment.
Take-away: Investing strategies can be as simple as following your heart or as complicated as following a mathematical formula. The key is to find the strategy that works for you and stick with it.
Make sure to create a plan, follow a process, and measure your results. It’s okay to make adjustments on your plan after seeing how your portfolio performs.
Before investing, it’s important to define some goals. For example,
- Ask yourself why you’re investing in the first place?
- Are you trying to establish yourself?
- Are you planning for your retirement?
- Do you want to have a family?
Ideally, your goals should be SMART: Specific | Measurable | Achievable | Relevant | Time-Bound.
Review your goals before you plan and produce an investing strategy to make sure it aligns with your needs. It is also important to refine your strategy over time when you become a more experienced investor.
First Things First (after you’ve already acquired some basic knowledge such as different types of investments, markets, analysis and exchanges)
Learn the first things you need to know about investing! For example, choose investments that will meet your financial objectives in terms of the risk or safety of the principal and your need for income, growth and liquidity.
Regardless of their level of risk tolerance, all investors should observe principal protection and practice trading discipline.
Trading discipline means observing the rules that you set for yourself to increase the likelihood of success and to mitigate losses.
You can reduce your risks by avoiding the following common mistakes.
Always have a strategy/plan and know when to profit or exit from an investment. In short, you should know what to do and what not to do.
Create a Go-To Template for every investment decision (sample below).
The Most Important Thing
I believe in capital protection (the first and most important challenge for all investors) and trading discipline (applicable to investors on any types of financial instruments even the conservative ones).
- Are you committed to stick to your plan when placing and/or managing an investment?
- Do you know what percentage of your investment principal can you afford to lose?
- Are you willing and prepared to accept failures and don’t take it personally?
- Can you sleep well when your investments go into the negative?
- Do you have the discipline to monitor your investments and act in time to cut your losses?
- Are you strong enough for the time, hard work and mental activity that go into the investment process?
- Are you comfortable to hold a non 100% principal protected investment portfolio?
If you answer Yes to all the questions, you have the potential to be a disciplined investor. Congratulations!
Always bear the most important thing in mind and stay disciplined!
Copyright © Beth Fiedler. All rights reserved.