3 tips to be a better investor
- Feb. 5, 2024
- 3 min read
What we'll cover
How to build confidence as an investor
Ways to get organized with your investments
Methods to diversify your portfolio
It's easier than ever before to be an investor. As brokerages simplify digital investing and eliminate commission fees that were once barriers, more people are able to take charge of their financial future. But even when you feel ready to invest, taking that first step can be intimidating.
Getting into the right mindset and sticking to a few solid strategies can boost your investment game more than you might expect.
You might invest for retirement , for fun or for future generations. No matter what your 'why' is, understanding it will help you stay motivated.
Once you have your why (along with your timeline and risk tolerance), form a plan — it doesn't have to be complicated. Start by mapping out how much you're going to invest and how often (for example, 10% of each paycheck) and in what types of securities (allocating 70% of your portfolio to stocks and 30% to bonds, for instance). With a clear purpose in mind and a basic strategy, such as dollar-cost averaging , to follow, you can become a more focused, consistent and confident investor.
From Reddit threads to viral tweets to news headlines, it can be tough to ignore the ups and downs of hot stocks. And when you hear of others making it big on these kinds of investments, it's natural to want in. Investment peer pressure is a real feeling, but oftentimes it leads to snap decisions that are more detrimental to your portfolio than if you block out all the buzz.
While stock market chatter on social media isn't necessarily bad, it can distract you from your overall goals. This is when having a clear purpose for your investments can be extra beneficial — remember what your endgame is and what your steps to get there are.
Portfolio diversification is one of the most essential strategies to manage your market risk. The premise is fairly simple: By spreading out your investments across a variety of different asset classes (stocks, bonds, commodities, etc.) and industries (technology, healthcare, entertainment, etc.), you're less dependent on the success of any one security.
When you only invest in the latest market crazes, you're essentially putting all your eggs in one very unpredictable basket. Especially with trending assets like NFTs or crypto, the wild price swings can result in uncomfortable portfolio volatility. Diversifying by investing in other more traditional securities and various sectors makes you less susceptible to the negative effects of one asset's ups and downs.
Becoming a better investor doesn't have to be a full-time job. It starts by finding resources and guidance you can depend on and implementing a few tried-and-true investing strategies in your portfolio.
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