Steps to Become a Good Investor
Posted on April 23, 2008 in Business and Finance by Shewli
Be practical
Be grounded in reality because the bull market makes people overconfident. Learn from your experience rather than just going ahead and taking risks by thinking that stock prices will always go high. Market does not go up always, it does crash down, so learn to manage your risks first.
Don’t be tempted to trade too much
Trading too much means you will have to pay extra commissions and increase your tax burden. Devise a strategy to buy and hold.
Start investing early
Don’t wait for an opportunity to invest. Start investing from now onwards even if it is a small amount. Small investments lead to bigger fortune in the long run. Get into the habit of systematic accumulation of wealth.
Look at company performance rather than market
Markets are unpredictable. Look at industries and understand the future of those industries. Try and understand the prospects of a company and then own stocks of that company.
Make decisions on time rather than understanding the prime market situations
Don’t wait for the best time to get in and get out. Maintain a systematic investment plans. Make fewer decisions to accumulate substantial wealth over time.
Don’t panic
When the markets are falling people panic and sell their stocks. Use this opportunity. Buy the stocks when it is falling rather than buying when the market is high and selling when the market is low. This strategy will curtail your losses. Remember most of the wealth is made in the long run and not overnight. So invest in company stocks that have better business prospects in future.
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