BEST INVESTMENT PRACTICES
One’s goal as an investor should simply be to purchase at a rational price, understand the business whose earnings are virtually certain to be materially higher a few years from now. An investor does not get a company like this easily so, when an investor sees something that qualifies this, he should try to do a meaningful amount of investment.
A set of any patterns or guidelines that an investor follows to keep the investments intact and allow it to appreciate over a period of time, is the best practice practiced by an investor.
The markets are too volatile in nature that could give you big risks or big rewards. Here are some of the best practices to follow as an investor.
7 BEST INVESTMENT PRACTICES
- Long term focus and unconcerned with volatility-
The investors who invest their money, want to make money quickly. But investors who want to earn higher profits need to stay and do not have to think about the changes in the market. Staying in the market for a long term will give you the advantage of compounding his gains.
2. Set your goals-
If an investor does not have a goal, then investment is of no use. The goals may be short term or long term but these goals will help an investor strive for the money. This is one of the best practices that should be followed by the investors.
3. Willing to be inactive-
Many investors feel that there is always something great to do in the market or they are always able to find a brilliant investment. A best practice can be to be inactive for sometime and wait for the perfect pitch. Try to be a passive investor.
4. Research the company and financial product-
An investor should study about the company, its CEO, CFO, directors before investing. An investor should study about the financials of the company before investing. Should know about the financial product about the financial product, how risk averse is the product.
5. Learn about the stock market-
Before entering the stock market, it is important to understand this market very carefully so it is important to understand fundamental and technical analysis.
6. Be unemotional-
Many of the obstacles to investment success are related to human emotions. Most become greedy, confident, and euphoric when prices are high. Warren Buffet has once explained how it is important to be absolutely immune to these emotional influences.
7. Mentally flexible-
The philosophy of investors should provide guidance but not rigidity. It is possible to come across new philosophy, but the key lies in knowing when to change and when to hold.
The markets are so fluctuating that you learn something new everyday as an investor, it is a never-ending experience.
Apart from the above best practices it is also important for an investor to make an investment plan that suits his priorities and also should have a diversified portfolio. An investor should be focused, disciplined and purposeful. These attributes listed are rare but not unique, so as an investor it is important to possess these characteristics.
What else helps to follow these best practices is to become a collector of information by reading and networking with a variety of people.