Investing Tips

Investing Tips

By Barbara Jolie

Investing can be a scary concept for people who don’t know much about it. Use these tips to familiarize yourself with the process.

1. Set clear goals: Why are you investing? Is it for short-term or long-term gain? What do you hope to accomplish? Ask yourself these questions before parting with any of your money.

2. Consider a target-date fund: A target-date fund automatically changes its risk set-up as you age based on your planned retirement date. This is a good pick for first-time investors.

3. Listen to your gut: Before investing, take a while, or even a night, to carefully consider the move. If the thought of it keeps you up and distracted, and if it just doesn’t feel right, don’t do it.

4. Avoid "too good to be true" situations: If an opportunity seems too good to be true, it probably is. Don’t over-extend yourself or wind up in a hole by chasing fantasies. Invest wisely, with planning.

5. Take investing seriously: Not to sound overly dour, but investing isn’t a game or a hobby. It’s a calculated financial move designed to yield a net gain. Approach it with caution and intelligence.

6. Understand fees and commissions: A fee is a flat rate, while a commission is a percentage. Generally, try to pay fees on big cash amounts and commissions for smaller ones.

7. Brush up on the Efficient Market Theory: Basically, this states that stock values are perfectly priced when you factor in all possible known information, so that the only way to really make big money is to take risks. Knowing this will help you plan those risks accordingly.

8. Don’t be greedy: In addition to the moral issues, greed is a bad financial choice. Just because you see someone making money through a particular investment doesn’t mean it’s a smart one to make. Always, always, always do your homework.

9. Consider overall value: In addition to a stock’s price, try to get a sense of its true value and how that might fall or rise with time. This is the true indication of a stock’s potential.

10. Get lots of advice: One of the biggest mistakes you can make is thinking you don’t need help, especially as a beginner. Talk with advisors and trusted friends with investing experience before starting out.

11. Don’t believe the hype: If you hear about a "hot tip," ignore it. There’s no such thing as a sure winner or inside scoop, and believing there is will just get you burned.

12. Be prepared to invest time and money: In addition to the money you’ll want to invest, you should prepare to spend plenty of time studying and researching the market and spend money on software or online memberships to trading sites that will let you invest.

13. Deal with the truth: If you’ve got a losing stock on your hands, no amount of wishful thinking will turn it into a winner. Don’t be afraid to confront the reality of the situation and save your money while you can.

14. Don’t forget taxes: Know how much taxes are required for different investment choices, and when it’s advisable to pay them. Taking tax policy into account before you invest ensures you won’t have any nasty surprises.

Article Source: http://www.onlineclasses.org/2010/06/23/50-important-financial-tips-for-young-adults/

Many people are afraid to invest in some companies like buying stocks of the company. But many people have been successful in investing and became millionaires others even became billionaires. We should take a risk in investing in companies, we should give them our full trust.

via reuters