Warren Buffet, widely regarded as the world’s greatest investor, is quoted as saying: “The markets, like the Lord, helps those who help themselves. But unlike the Lord, the markets do not forgive those who know not what they do.”
If not from me, take it from Warren. Learn to swim before you jump in. Otherwise it’s a fool’s game and you are most unlikely to win – certainly you won’t win over the long haul. Most of us have to learn by ourselves, making costly mistakes and (hopefully) learning from them as we plod along. Here are a few simple tips to help you out...
First, to be an effective investor, you need an education in the basics of personal finance. So read a few investing and finance books. Flip through the financial section of the newspaper. Learn how to read and analyze a company's annual report. Ask questions of your friends and family, and try to learn from their mistakes. The more familiar you become with basic financial strategies and investment concepts, the easier it will be to make appropriate investment decisions.
Determine your financial and life goals
There is no "right" way to invest—it all depends on what you want to accomplish with your portfolio. So before you invest, ask yourself: what are you trying to achieve? What are your financial and life goals? What are your timelines? How much risk are you prepared to accept, and for what anticipated return? What do you want to do when you retire? What kind of legacy do you want to leave behind for your family and community? The answers to these questions will help guide future investment decisions.
Don't try to time the market
Many investors get wrapped up in trying to time the market, trying to pick the "perfect" time to buy low and sell high. The truth is, timing shouldn't be part of the investment equation at all. By investing the same amount every month (for example, through a monthly pre-authorized chequing plan), you'll be taking advantage of market volatility, buying more when the market is down and less when the market is up. A simple strategy, but it works.
Ignore the hype
During the dot-com days, it was hard to ignore stories about high-tech and telecom stocks soaring to the moon. But we all know what happened in the downturn that followed. The lesson: be cautious whenever someone tries to sell you a “sure thing.” Instead, do your homework, understand what you're buying and make your investment decisions based on fact, not hype. In other words, trust if you will – but verify to be safe.
Work with a professional
Most people have neither the time nor the knowledge to be investment savvy, so consider working with a qualified financial professional. Find a professional you can trust, and build a partnership with them. Use their knowledge, objectivity and experience to capitalize on opportunities, and avoid dangers. That’s the best way to become a better investor.
As always, please do not hesitate to communicate with the writer if you would like additional information on this topic.
Joel Attis is a Senior Financial Advisor with AttisCorp Wealth Management and IPC Investment Corporation. Comments or questions may be submitted to Joel at firstname.lastname@example.org, or he may be reached at 855-1155.