Investing For Fun and Profit – 4 Tips For Beginners to Investing

Just about everybody knows that you should have some sort of investment strategy, even if it’s a simple one to conservatively grow your wealth. So if you’re looking to get into the investing world, these tips will be a step in the right direction.

Diversify

As it’s just about impossible to be 100% certain of what the market is going to do, it’s better to put your eggs in many baskets in order to spread your risk. All markets have some measure of volatility, so diversifying your portfolio will also generate more consistent returns over the long haul.

Think Long Term

If you stay in the same investment for a long period of time, you’ll benefit from what Albert Einstein called “the most powerful force in the universe” – compound interest. Your investments will have some time to grow and continue to earn returns for you. Staying in the market will also remove the “bad timing” errors that you can make if you continually hop in and out of a market.

Be Regular

If you are making regular contributions to your investments, you’ll average out the cost of your investments over time. This concept is known as “dollar cost averaging” – which is a common strategy used in the share market. It will actually allow you to benefit from market downturns, as your regular contributions will have greater buying power when the price of what you are investing in is low. For example: If you spent $1000 on 1000 shares for $1 each and the price suddenly goes down to 50c, you could buy twice as many shares for the same amount, thereby making the average price you’ve paid for your shares only 75c.

Seek Help

Most people have better things to do than monitor their investments. Seeking the help of a professional financial adviser will allow you to keep up with the latest changes in legislation, which could make a big difference to your returns.

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