The internet is bursting at the seams with stock market advice, and not all of it is worthwhile. New and experienced investors can easily be led astray by the confluence of competing ideas that are published all across the internet’s spectrum of reliability and interest. For instance, it’s easy to find advice warning against investing in penny stocks, yet plenty of market speculators would advise buying into this method for the potential of quick returns. The drastic discrepancy in stock tips comes from the individualistic assumption of risk that all investors must address before they enter into the market. This is really the crux of the issue, and you must understand your financial realities to their full extent before you can hope to succeed in the market. This is the universal reality of investing.
Understanding your comfort zone
Before you put your money into a brokerage account, it is important to evaluate a few simple truths about your comfortability with risk and your financial goals for that money. Some investment platforms force you to address these questions, such Robinhood — if only briefly. These questions include an honest look at how long you plan to leave your money in the market, what you are planning this saving for, and what you are most likely to do in case of a market turn down. Understanding your investor profile can help you make informed decisions about your money, and make you a better investor over time.
These factors matter significantly when developing your portfolio and personal style. If you are an older investor, you might be seeking a low-risk investment vehicle that protects your principal investment while netting respectable returns to provide for your continued lifestyle. Alternatively, you may be a young parent hoping to create a college fund for your newborn. These investors likely desire a more aggressive strategy to build high gains over the next decade and beyond from a relatively small initial investment with routine additions to the principal. Generally speaking, younger investors do and should take on more risk, but this is not always the right way to approach the market. The right way is the one that works for you and your financial goals. As well, this is not to say that risk need be necessarily reckless; there are always bad decisions that investors can mistakenly fall into, but calculated risk is a good thing for your future financial growth.
Learn from reputable sources
If you genuinely don’t know the answers to these questions, finding an informative trading blog that you trust is a great place to start. Reading blog posts about the convoluted world of investing for routine and up to date advice will help you develop your personal views on what and when to buy. Once you have developed this unique outlook, continuing to read the musings of others who possess greater investment talents than your own will provide you with the added benefit of a trading outlook that fits your view of the risk/reward landscape but is much better informed. Don’t be ashamed to do your homework. In fact you cannot hope to succeed without it.
The facts are simple. Informed investors are the best investors. Whether you want to build your nest egg and save for retirement or save for a more immediate short-term goal, the best way to do it is through informed decision-making. Seek out a variety of sources of information. Not every investment opportunity is right for you, and no stock is worth buying for every investor. Make sure you do your homework and make the smart choice for your money.