Although the stock market is a place of uncertainty, there are some tried-and-true strategies that can help you improve your odds of long-term success.
Investors should first determine their financial goals. For instance, saving for retirement, purchasing a home, or funding the education of your children. This will allow them to decide how much money to invest and what kind of investment is best for their needs.
The importance of establishing an emergency fund or repaying high-interest loans prior to investing in the market is also smart. If you have the funds to invest in the market, begin with a small amount and gradually increase your investment as you gain more experience.
Keady says that one of the most common mistakes beginners make is to attempt to time the market. “Nobody knows the perfect moment to jump in,” she adds, noting that the most effective strategy is to make an investment over the long term and stay with it even through rough patches.
If you’re just beginning it’s best to concentrate on stocks from firms that you are familiar with. As the legendary Fidelity Magellan fund manager Peter Lynch famously pointed out that you stand a better chance of winning when you bet on companies that have a solid track record and solid growth prospects than attempting to predict the future.
Avoid forums and advertisements that promote stocks that have a high chance of success. In many cases, they are part of a pump-and-dump scheme in which shady people purchase buckets of shares in a tiny firm to boost the price and then dump their shares to line their pockets.
