6 Tips For New Investors

by Darren

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Being a new investor is a daunting task. One of the key factors that make learning investing different than other endeavors, is the fact that you stand to lose real money if you’re wrong. This can cause a fear among new people that might make the whole concept of learning investing scary to some. But you don’t have to approach investing in a fearful manner. Instead, just follow some simple tips that can get you up and running quick.

Tips for successful investing

1) Avoid looking for gurus. You don’t want to fall into the trap of leaning on the advice and opinions of others when it comes to your investments. Indeed, it’s your money, and as such, you’re the only one who protect your capital. Much of the advice you get will be self-serving, and some of it will be downright damaging.

2) Always understand your risk. You need to find out exactly what the downside of your action is. If you stand to lose all of your money in a deal, you need to know this upfront, before you pull the trigger. Ignorance is never an excuse and you’re the one who has to pay. So understand what happens if things go wrong.

3) Calculate your costs. Investing is not the cheapest activity you can get involved in. Find out exactly what fees, if any, the investment carries with it. Transaction costs and additional fees can tear up any profits on a low return deal. Always calculate your transaction costs carefully.

4) Always plan your investment. Make sure you have a clear cut goal of what type of return you seek and make sure you have a plan for how much of a loss you can tolerate. If you invest money and get a big return, you should have a plan for when to sell. If the opposite occurs, a plan can save your hide by getting you out before you lose your shirt.

5) Understand how much service you need and will get. Newbies might be interested in paying the lowest cost in order to invest, but what happens if you need to ask a question? Does the company you’re going with offer good customer service? If it’s important to you, you’ll need to know their reputation up front.

6) Put your intellect above emotion. This is easier said than done, but is imperative for your success. Don’t lead with your heart and regret the decision later. Analyze all of the aspects of your investment using intellect and don’t get “excited” about it. Emotional investments tend to go bad, while well-thought ones tend to earn profits.

Every investor is new once. It’s a fun time to learn about investing because everything is fresh. Since you haven’t developed any bad habits as a new investor, that’s the time to have an open mind and to really delve into learning. Good luck!

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