This will review the five investment tips for beginning investors. To keep what you have and hopefully pocket a little more, you need to keep a few things in mind.
1. The company you choose to invest in should have a solid background and history. Look into past years and see how the company has fared. First of all, does the company even have a history? Can you see what they have accomplished over the past 5 years? The past 10? I won’t say that new companies are bad, because you can make some really good money investing in solid start-up companies, but established businesses are the safest place to be and more likely to keep and grow your investment if they are holding their ground or gaining market share.
2. Does the company have earnings? This can be found by looking at the price-to-earnings ratio(P/E). Although the P/E is merely a projection and not a guarantee of return, companies do their very best to hit the projected returns because missing them would most likely impact the stock price.
3. Does the industry have a future? All the past accomplishments don’t mean a hill of beans if the company is in a dying business. Several years ago, a company doing extremely well selling floppy discs would have soon been history unless they moved into a new segment of the information storage industry. Always remember (and this investment tip might sound a bit basic), money is made in the future, not the past.
4. While we are talking about the future, remember not to make the company’s future too personal; look at the big picture. If you are not a computer person, the above example may seem to make no sense to you. If you are looking at a make-up company, don’t think “I don’t use much makeup (or maybe any). I don’t think this is going anywhere.” Keep in mind the general population, not just your little segment. (I love to read and look at educational films, but that doesn’t make those the best investments to make money.)
5. Keep your head. The industry has seen a lot of corrections and downturns. That doesn’t mean you made a bad choice in a particular stock. If the fundamental reasons you invested are still holding true, perhaps you want to hold onto a stock instead of dumping to avoid a temporary loss. The market has its ups and downs. Don’t panic. Set an exit strategy from the initial purchase, and stick with your plan. If you have a 10% stop loss, stick with that. If your plan is to sell when you make 25%, stick with that. Don’t let “market madness” take its toll.
Most people who consistently make money in the market do it over the long haul. If you pay attention to these simple investment tips you can join that group.