Friday, May 18, 2012

The Most Efficient Investment Knowing the Least

Everybody is saying that if you want to become an investment pro you have to read tons of books on investing and have many years of experience in the field. And this is true, if you want to become a pro, but do you necessary need that? It is a big question, because sometimes investment professional have worse results that investment amateurs from their investments. 

The thing is that investment professionals are restricted by many rules and pressure by their management and clients while small private investors have all the freedom they need. 

Another important fact is that sometimes investors need to know few simple things and achieve quiet good results from their investments. Well, in fact it is important not to only know those rules but to follow them strictly too. 

Those are the most important rules: 
  • Diversification. All investment portfolios have to be well diversified and that will reduces risks and improve returns from the portfolio. 
  • Don't give up to the panic. Or it may also sound as a 'buy low sell high'. And this is the way to make biggest profits. Of course you will never know when it is the bottom of the stock market or when is it top. All you need is to have some strength to hold your stocks when everybody is selling. 
  • Use fundamental analysis. Fundamentals is the only serious way to analyse stocks and to predict they value. Value is everything and the price is nothing. 

Saturday, January 28, 2012

Investing for Young People

Investment for young folks is a bit different from regular investing. If you will ask what is difference? I would say that there are many differences and if you want to know them all you simply should seek for differences between young people and matured people. 

At first young people feel much of hunger: they don't have good jobs, well positions in society. And they want everything to get faster and in more simple way. That's makes them to seek for more risk at investing. Because they want to get results faster. And there are no investments over the world that would offer the maximum returns and profits without high risk. 

High return investments are riskier and young people are looking exactly for these investments. And that is normal in some way because young people can risk more - they have very long investment approach and that is the main factor for risk selection of an investor. Every young person should seek for long term investing if he really wants to get rich. The power of compounding is extremely powerful financial tool and can be used perfectly by young people. 

It is especially important for young investors to seek more knowledge. They should read a lot of investment books, articles about investing and other information. It is also advisable to read financial portals (as Google Finance) and feel the financial information to know what is happening over the world.