You may be someone who owns a business or who derives their income from several sources thanks to your entrepreneurial skills, and this post relates to another means of increasing your wealth, investing in shares. Share investment is one of the core means of wealth creation that financial planners regularly plan for and manage for their clients, and the beauty of share investing is that entry to it is relatively easy.
Unlike property investment where you need a huge level of capital or need to be prepared to borrow hundreds of thousands of dollars, you can get started with share investment with as little as $1,000. Obviously, at that level, you are not going to earn a huge return, but it is a great way to dip your toe in the water and to see if you like share investing.
If you do, then and plan to significantly increase your level of investment, then we again stress it is important that you discuss this with Perth financial planners. Trying to trade shares without any advice or support is a recipe for disaster. In addition to speaking to your financial planner, there are several core principles that you must follow. These ensure that you buy and sell shares sensibly and that you reduce your risk of losses.
Below we have highlighted five tips as these are the most important ones to follow and thus stay true to share investing’s core principles.
You Must Seek Expert Advice
This should be the first step in just about anything you do concerning your finances and most certainly applies when you are considering investing in shares. Speaking to and receiving advice from a financial planner can help you make the right decisions about your share investing and more important than that, can prevent you from making the major mistakes that would undoubtedly cause you to lose significant sums of money.
Diversify Your Shares Across Companies And Sectors
Although there may be a business sector that you prefer, and that may even be the sector with which your business is aligned, however, not only does that limit your ROI, but it also generates unnecessary risks. You want your share portfolio to be diversified to benefit from big jumps in values within a certain sector and at the time to not be wiped out if a single sector plummets. This applies both ways to single companies too.
Do Not Make Impulsive Decisions
More money has probably been lost on the stock market due to hunches, second-guessing and raw emotion than in any other way. We would also add to those, decisions being made impulsively and with little thought aforehand. Do not become a victim of your emotional decision making and stick to pure logic, with your mind making the decisions, not your heart.
Follow The Data And The Feedback
At its core, share investing is a numbers game and if you follow the numbers, the data, and the logical conclusions that you can derive from all of this feedback, you will make better share investing decisions. It might not sound glamorous, and it can be tedious trawling through a computer screen full of information, but it will be worth it when your better decisions pay off.
Be Patient
You need to fully understand from the outset that shares investing is not a get rich quick scheme and we are sure your financial planner will also confirm that when you speak to them. It needs to be approached as a long term venture and one which you see as providing you with an income and an ROI over the longer-term rather than a quick win on day one. When it comes to share investment planning, patience is your friend.