Buying stocks isn’t rocket science. The most challenging part is choosing companies that consistently beat the stock market. So, if you’re looking for strategies that’ll deliver results in the stock market, continue reading.
5 stock market investment tips
-Keep your emotions at the door
-Pick companies, not stocks
-Plan ahead for panicky times
-Build up positions gradually
Keep Your Emotions at The Door
When it comes to stocks, let your head, not your gut, drive your investing decisions. This is because trading overactivity could trigger emotions and that’s one of the most common ways investors hurt their portfolio returns. The best tip for investors, is to cultivate the temperament required for long-term success.
Pick Companies, Not Ticker Symbols
It’s very easy to forget that behind the alphabet soup of stock prices along the bottom of every broadcast, is an actual business. That’s why you shouldn’t let stock picking become an abstract concept. Always remember that buying a share of a company’s stock makes you a part-owner. When investing, you should know how the company operates, who its competitors are, its place in the overall industry, and its long-term prospects.
Plan Ahead for Panicky Times
Most investors are tempted to change their relationship statuses with their stocks. Making impulsive decisions such as these can lead to buying high and selling low. And, believe it or not, journaling helps. So, be sure to write down what makes every stock worthy of a commitment while you’re calm. After this, write down the circumstances that would justify a breakup. Reading your notes can help you avoid such impulsive decisions.
Build up Positions Gradually
Time is an investor’s superpower. The most successful investors buy stocks and expect to be rewarded over years or even decades. This means that you can take your time in buying, too.
Here are some buying strategies that can reduce your exposure to price volatility:
Dollar-cost average: Dollar-cost averaging refers to investing a set amount of money at regular intervals. Your set amount of money will buy more shares when the stock price goes down and fewer shares when it rises.
Buy in thirds: Buying in thirds can help you avoid the crushing experience of bumpy results right out of the gate. To do this, divide the amount you want to invest by three and pick three separate points to buy shares. This can be at regular intervals, based on performance or company events.
Buy “the basket”: If you can’t decide which companies will be the long-term winner, buy ’em all! Doing this reduces the pressure off picking “the one.” Also, you won’t miss out if one takes off, and you can use your earnings from that winner to balance any losses.
