Being smart with your investments is important if you want your portfolio to grow to its full potential. If you are new to investing, you may be nervous to put your money into the market or move it after you have put it in the market. What can new investors do to get over their investment nerves?
1) Develop a Plan
It is important to create a plan for your money. Create a plan that will help you to grow your money over the long-term while providing opportunities to move your money if necessary to protect it in the short-term. If you aren’t sure where you start, talk to a financial planner or take a Phoenix investment management class.
2) Keep Your Emotions in Check
The worst thing that you can do is to invest based on emotion. When the market goes down, the last thing that you want to do is sell. In fact, you may want to buy more shares at a lower price and increase your profit when the shares increase in value again in the future. Do your research and try to predict whether the price has fluctuated in the past and if it will go up again.
3) Diversify Whenever Possible
Diversification is the key to keeping your portfolio strong during any type of market. Those who are investing for the first time may want to put their money into mutual funds to help them reduce their risk. Mutual funds are created in such a way that they can actually gain in value during times of poor economic performance. If you have ever heart the saying, “Don’t put all your eggs in one basket,” this applies to investments. Use multiple methods of investing so that if one fails, you won’t lose everything
4) Take Educated Risks
There is nothing wrong with taking a risk every so often. If you put all your money into money market accounts or CDs, you may only make 1 or 2 percent a year when you should be able to grow your money by much more than that. In the event that your risk doesn’t pan out, learn from it instead of letting it scar you forever. If you have spread your money in a variety of stocks, one bad move shouldn’t break you.
5) Evaluate Your Portfolio Once a Year
Once a year, you should evaluate your portfolio on your own without the help of a professional. This is a time where you should take a hard look for yourself at where your money is and come up with ideas as to how you can make it grow in the next year. Compare what you have learned with the advice of the professional and evaluate whether working with them is still your best option.
If you are new to investing, you have a lot to learn. However, you won’t learn unless you try new things and make mistakes. Although you should seek the help of a professional, make sure that you retain final say over where your money goes and never stop coming up with your own investment ideas.