dollarbreeders
2016 is shaping up to be year of switching financial gears here at FamilyMoneyPlan.com. Our mortgage is paid off and soon so will the rest our debts will follow.
So we are turning to building wealth. While we have done some investing on our own in the past, we have also made some mistakes. With those mistakes in mind, and learning from our past, I’d like to share a few ways with you to not stink at investing.
Start Small
Is it just me or when you start doing something new there is this overwhelming urge to go all in right away? You too? Well… maybe it’s just me, but one it’s been one of my biggest mistakes.
Start small, if you are nervous, which btw happens to be a normal thing, then get bigger a little at time. Never bought stocks before? Buy one share. See how it feels. You don’t have to invest everything you have right off the bat. And you shouldn’t invest everything right off the bat.
I have seen people lose their shirts because they think :“Go big or go home!” Sadly I’ve also seen a few lose their home because of this mentality. Investing is a game in many ways and there are big payoffs and at times big loses. Know the rules and learn to play the game. Start small.
Tip: Know your risk, and start small. Once you learn the game, then its time to grow.
Go Slow
When you start investing, there can be this temptation to get in really quickly. You just found out that there is a red-hot market and you can’t wait to get in the game. Hot diggity dog!!!
First of all slow down! Remind yourself that a Fool and his/her money are soon parted. Then remember it’s the Fools who rush in. You may miss out on the current opportunity, that’s ok! It’s not the last chance to ever make money the history of time. Get your facts right, do your due diligence and make sure you are confident before you get in. Make sure you have a plan too.
Always remember an investment is like a bus, if you miss it there will be another one. There is no need to jump in quickly. Get ready, get prepared, and take action once you are informed and ready. If you ever feel that urge to jump in head first, fight it, and take a step back.
Sure you might miss out. But you have been missing out on things your whole life, you just weren’t aware of them.
Tip: Investments come and go don’t get caught up in the hype.
Think Long-Term
Warrant Buffett has a great quote: “Only buy something that you’d be perfectly happy to hold if the market shut down for 10 years.”
Friends, here’s the truth about investing that the slick smooth-talkers don’t want you to hear: “The shorter your time frame, the harder it is to make money”. This is commonly known as market timing or trading. While some people do make money, it can be extremely hard to do. No one knows what is going to happen tomorrow, don’t believe anyone who tells you otherwise
The truth is most people lose money trading, that’s why when we hear these success stories we are so taken in by them. I’m not saying it’s impossible. But the shorter the time frame the harder it is to make money on an investment.
Tip: Think about your investments with a long-term time frame and make sure it fits your plan. The longer your time frame the better your chances of being successful.
Invest in something you understand
This is something that is often overlooked. Do you know how a company makes money? It takes a good or service and sells them at a profit. Pretty simple. It’s the nature of all business. Do you understand why stocks go up and down? Do you understand how rental properties make money? What about websites? Before you put your money into any type of investment make sure you understand how the investment works. Most importantly know how will you get your money back.
I could go on forever with all of the tips we have learned both the easy and hard way. If you would like to know more, sign up for our newsletter and join us in our journey towards financial freedom.
Andrew Daniels is founder of FamilyMoneyPlan.com, where he writes about their family’s financial journey from how they have climbed out of their $340K debt and are building wealth towards the goal of financial freedom. To connect with him on Twitter @FamilyMoneyPlan or Facebook.com/FamilyMoneyPlan
investment tips
dollarbreeders
