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5 Secrets for Successful Investing

people standing around the table and investing elements

There are lots of ways to have a successful investing process. In this article we will mention some of most important of those secrets. As an investor you should learn always and you should be aware of the world yo live. This article tries to lead you to a better investing experience.

 

1. Make a binding commitment

Investors can use three methods to create a binding commitment:

Applying

the “strategic asset allocation” method, which means redesigning the portfolio of assets to adapt to market changes.

Observing

“diversity” in the portfolio, which is a common rule that every investor must follow, is the so-called “do not put all your eggs in one basket.”

Invest regularly

 

2. Apply strategy along with tactics

The investor must combine strategy with tactics, that is, invest in strategy. Investors have to decide whether they want to invest in stocks or bonds based on their strategy and depending on their risk level. The “strategic asset allocation” method can be easily used in balanced asset portfolios. If everything is actively managed, it will be easy for portfolio managers to make tactical adjustments (without even investors worrying about anything).

 

1. Create diversity

No investor should put all his or her eggs in one basket. However, only a handful of them follows this rule. Keep in mind that you may not always be able to choose the best possible combination for your portfolio, but you should not spend all your investment on a single stock, asset, or bond.

 

2. Regular investment

If you are going to save, the method is quite clear, but if you want to earn more than this, you have to risk and this risk can be in the form of market risk, stock market risk, or inflation risk. Although there is no guarantee to achieve the desired result, but three effects can be combined tactically.

 

– Diversification effect

Regular investing allows you to diversify your stock and bond portfolio. Investment diversification strategy is the key to high return on investment and successful investors always prefer this method.

 

– Medium cost-effect

When it comes to paying a certain amount regularly in a retirement savings plan, it means that stocks are bought in different amounts because their prices are constantly changing as capital market trends change.

 

– The effect of compound interest

If you want to have the benefits of the compound interest effect by reinvesting in distribution, you have to save for a long time.

 

3. Know “what you want” and then “challenge yourself”

Brain function is the result of a healing process that is always happening over time. This is why our brains sometimes show certain patterns of behavior that are not logically easily explained. To make this clearer, let’s give an example:

As an investor, you often use a specific framework for viewing the investment world. You see everything you want to see, and instead of looking for better options for better results, you are constantly monitoring the losses. You prefer to follow the general flow, follow the crowd, or rely on certain emotions that constantly evoke a sense of greed and fear of harm. Test yourself before making any decision. See from the beginning your mind is looking for, what if I lose? or do you see your chances of winning more than losing? Although the desire to want more may be both good and bad, the only truth it reflects is your “preferences.” This mindset can be very dangerous for you as an investor if you prefer to put all your savings in one savings account and just because of the fear of losing, the idea of higher returns.

 

4. If your horse dies, get off it

“If your horse dies, get off the horse,”. There are still many investors in the market who buy their stocks at the right time at a good price, but after the market downturn, even after years, they still hope that their share price will return to the previous level and keep their stocks in that hope. However, even if they decide to sell their stock and want to replace it with a new stock (which may have a good return), they still ultimately prefer to stick to their beliefs and make a profit from their stock. Keep it for a long time. Just as the right time to invest and buy stocks is important, so is the right time to get out of stocks.

 

5. Investment Constitution

A successful investor is well aware of the fact that if he or she ignores the risk, he or she cannot have the benefits of the risk. This is one of the constitutions when it comes to investing. To understand the importance of investing in risky assets, one must consider the high returns that result from such investments. Likewise, low-risk investments do not bring much return.

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