Although the stock market is filled with uncertainty, certain tried-and-true principles can help boost your chances for long-term success.
The first thing an investor needs to establish their financial goals, such as saving for retirement, purchasing a home, or funding your children’s education. This will help them determine how much money to invest and which type of investments will be best suited to their needs.
It’s also an excellent idea to focus on having an emergency fund in place and paying off debts with high interest before investing heavily in the market. Start with a small amount and then increase your investment over time as you become more experienced.
Keady clarifies that one the biggest mistakes made by novices is trying to predict the market. Keady says no one knows what the ideal time to invest.
If you’re just beginning, you should concentrate on stocks of companies you are familiar with. As the legendary Fidelity Magellan fund manager Peter Lynch famously said that you have a higher chance of winning if you bet on companies with a solid history and strong growth prospects than attempting to predict the future.
It’s also a good idea to stay clear of websites and advertisements that promote sure-thing stocks. In a majority of cases, these are part of a scam called a « pump-and-dump » where shady investors purchase buckets of shares of a barely traded company to drive up the price, only to then sell their shares to fill their pockets.