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5 Tips to Become a Better Investor


Dec 28, 2020
5 Tips to Become a Better Investor

Becoming an investor by learning to manage money and building an investment portfolio can be a difficult task for many laymen. For some people, it is simply a matter of not having enough time to pay attention to how their wealth is invested and the risks they face from the investments they make. For others, the difficulty of becoming an investor comes from a lack of interest in understanding the intricacies of investing, finance and money management. These people may be smart, hardworking, and even brilliant in other areas of life, but they’d rather do other things than talk about numbers. Additionally, they may not know how to read annual reports, income statements, balance sheets, mutual fund prospectuses, or proxy reports.

Those of you who are currently learning more about the world of investing may experience one of these problems. Becoming an investor, like anything else in the world, requires basic knowledge first. It is never too late to start, now it would be better than if you kept putting it off.

Practical Tips To Become A Reliable Investor

Investments if practiced will help you to get more benefits. Both in terms of financial planning and adding assets and wealth. Many people don’t want to invest their wealth because they don’t know how to become an investor. Being an investor for most people means getting into stock investment by spending a lot of capital to buy shares.

However, there are actually many ways to become an investor, not just through stocks. Becoming an investor is also not only possible for entrepreneurs but also the general public. However, there are still many opinions that the investment world is a difficult thing to enter.

Now this is no longer relevant because the investment world will feel easy when you really decide to become an investor. There is a lot of convenience and knowledge that is easy to get by novice investors today. Various programs and sources of knowledge are now easily available. In addition, there are a number of surefire tips that we can apply to get maximum investment results.

The following article will discuss some common mistakes to make you a better investor.

1. Avoid Investing in Anything You Don’t Understand

People seem to forget this basic principle if they are not reminded. You are never required to invest in any specific investment. Don’t let other people convince you to invest in things you don’t understand. Many opportunities will arise in life.

Don’t let the fear of falling behind cause you to do things that are not right. If you or the person managing your money can’t explain the basic principles of investing such as where and how the money is made, how much is paid out for that income stream, and how the money will eventually return to your pocket, then you are not investing.

That means you are speculating. It may be profitable, but this is a dangerous game that is unsustainable and has the potential to be lost in the future. Make sure you understand exactly where to put your money. Unfounded beliefs or just hoping for luck will not have a particularly good effect on your finances.

2. Learn to Think in Net Present Value

If you have a 100,000 rupiah note in your pocket today, the value of the 100,000 banknote depends on many factors. If you have a long time span and can get a satisfactory rate of return, compounding can work wonders and turn it into $ 10 million. Being a successful investor is about making choices. Make your spending and investment decisions this way.

Understanding this concept can help you avoid the mistake many people make of sacrificing their true long-term goals for their short-term desires. In terms of investment, for example, there are types of investment instruments that are not optimal in the short term. If you have decided to make it a long-term asset, don’t be easily tempted by anything else.

3. Never Think About Performance Without Taking Risk Exposure into account

A very dangerous sign arises when investors start talking about “big” returns without discussing how those returns are generated. You need to do the following to minimize your risk exposure to your investment.

Pay your investment in full and in cash and buy only stocks or bonds you would love to have for the next five years if the stock market closes and you can’t get the market valuation quoted on it.

4. Invest for the Long Term

Sticking to an optimal long-term strategy may not be the most attractive investment option. However, your chances of success will increase if you stay on track without letting your emotions, or “fake friends” influence your decisions.

One of the main concerns in investing is market volatility. Volatility measures the rate at which prices change over time. Investments with high volatility carry a high level of risk because the price is unstable. The return on long-term investment is found in the relationship between volatility and timing.

5. Find the Right Investment Strategy

The level of knowledge, personality, and resources you have should determine what investment strategy to choose. Generally, investors adopt one of the following strategies. Maybe you often hear this expression, don’t put all the eggs in one basket. In other words, diversify your investment portfolio.

Another strategy is to put all your eggs in one basket, but watch the basket carefully. Most successful investors start with a low risk diversified portfolio and gradually learn as they invest. As investors acquire greater knowledge over time, they become smarter about taking a more active stance on their portfolios. In addition, look for the best recommendations for your investment, including securities companies, instruments and various other things. Do not let because of a lack of understanding then you take the wrong steps in managing your investment. Look for as much relevant information as possible.