One of the best ways to think about investing, is to imagine it as being a kind of game, played for real money. Like any game, some people win and some people lose, and the ones who win are usually the ones who know what they're doing. That is to say, the ones who understand the game, and have a plan to win. In the great game of investments, this plan is your investing strategy, and if you don't have one, you're leaving your future up to the whims of chance. Speaking for myself, chance is not something I want involved where my money is concerned.
Your investment strategy is the key to managing your wealth. It should consist of a specific goal that you want to achieve, as well as a plan to get there, fully informed by your current situation, and your personal preferences regarding time, money, and risk. If you need a pair of shoes, you don't go out and buy a shirt. Of course not, that would be crazy - if you need shoes, you buy shoes. Well, investments are a lot like clothing - there are all kinds available, in all sorts of colours and styles to suit a variety of people, but the only ones that will do you any good are the ones that fit you. Now, there are a few differences between investments and clothes, but really the principle of the thing is the same.
Thinking through your options in advance can be overwhelming, as there are just so many to choose from. That's why you need a method of sorting the good from the bad, and that method is your financial strategy. Know what your goal is, have it totally clear in your mind, so that you can immediately spot the investments that won't help you and ignore them. That way you can concentrate on examining the investment possibilities that do meet your goals, and finding the best one - or combination - to help you achieve them. In particular, pay attention to your own tolerances. If you only want a safe, secure investment, then you can cross off the riskier ones; but if you are less worried about risk, you might want to focus on other aspects. In any case, the important thing is to know what you want, what you are looking for.
If you are new to investments, work closely with a financial planner before making any investments. They will help you develop an investment strategy that will not only fall within the bounds of your risk tolerance and your investment style, but will also help you achieve your financial goals.
As a last note, don't invest anything you can't afford to lose. Nothing is certain, and the stock market (the most common investment tool), is particularly vulnerable. If you plan well and think ahead, you will almost always come out on top, but there is always some level of risk. This is massively increased if you don't have a clear plan to follow, in which case trying to invest is little better then gambling. No, the more thought you put into it now, the better your chances of coming out on top in the end, so make sure you follow a strategy!
Your investment strategy is the key to managing your wealth. It should consist of a specific goal that you want to achieve, as well as a plan to get there, fully informed by your current situation, and your personal preferences regarding time, money, and risk. If you need a pair of shoes, you don't go out and buy a shirt. Of course not, that would be crazy - if you need shoes, you buy shoes. Well, investments are a lot like clothing - there are all kinds available, in all sorts of colours and styles to suit a variety of people, but the only ones that will do you any good are the ones that fit you. Now, there are a few differences between investments and clothes, but really the principle of the thing is the same.
Thinking through your options in advance can be overwhelming, as there are just so many to choose from. That's why you need a method of sorting the good from the bad, and that method is your financial strategy. Know what your goal is, have it totally clear in your mind, so that you can immediately spot the investments that won't help you and ignore them. That way you can concentrate on examining the investment possibilities that do meet your goals, and finding the best one - or combination - to help you achieve them. In particular, pay attention to your own tolerances. If you only want a safe, secure investment, then you can cross off the riskier ones; but if you are less worried about risk, you might want to focus on other aspects. In any case, the important thing is to know what you want, what you are looking for.
If you are new to investments, work closely with a financial planner before making any investments. They will help you develop an investment strategy that will not only fall within the bounds of your risk tolerance and your investment style, but will also help you achieve your financial goals.
As a last note, don't invest anything you can't afford to lose. Nothing is certain, and the stock market (the most common investment tool), is particularly vulnerable. If you plan well and think ahead, you will almost always come out on top, but there is always some level of risk. This is massively increased if you don't have a clear plan to follow, in which case trying to invest is little better then gambling. No, the more thought you put into it now, the better your chances of coming out on top in the end, so make sure you follow a strategy!
About the Author:
This article written by Stephen Hauptman, experienced trader of many years experience. If you're a new trader - or even an old hand - looking for the best stock investment strategy, take a look at his site, where you'll find expert stock predictions by one of the best in the biz!
