Investments:  Successfully Making Your Money Work For You

Making wise investments and taking care of your money is a long-term goal we all aspire to.  The following covers some key concepts on making wise investments.

Invest safely. In general, if there is money that you will need to use to pay your mortgage, for family reasons, or for other personal reasons, you do not want to risk that money in more dangerous investments such as stocks. In such a case, you should invest in investments with a fixed-income return, such as a term deposit which guarantees you a certain amount of interest each year. You should also familiarize yourself with whether any of that money is insured in case that financial institution. You may also want to divide that money up into two or more different financial institutions just to be on the safe side, and usually, the larger the financial institution, the less likely it will close down. However, if you do have some extra money and would like to play stocks or other more risky types of investments, do go ahead. Just be forewarned that there is the possibility of losing all, and often some, of your money. If you do not mind that, then go ahead.

Diversify your investments. For those with the money to spare to invest in the more risky types of investments such as stocks, try to diversify your portfolio. Have stocks from different sectors. Have blue-chip stocks and have some more risky stocks. You may also want other types of investments such as mutual funds (again, you can diversify within mutual funds), currencies from different nations, as well as some gold or silver. Please remember to also have some safe types of investments such as term deposits. Also remember to allocate some money for emergencies and for your retirement, so do not use it all in risky endeavors.

Determine how much you are willing to lose beforehand. Once you have invested, the emotions become much more intense and you may not decide rationally. Also known as a stop-loss order, you determine this beforehand to sell the stock or other investment so that you only sell it at a predetermined level that you are willing to sell at. Many people set it to perhaps 10-15%, or perhaps 20%, if you are willing to take the risk. You may also want to determine how much you want to make beforehand so that if your stocks rises, you can decide to hold onto it until you have a 20% return, for example.

Do not get addicted. If you have made some money from the stock market, try not to let it get addicted. Use it as a form of pleasure, but do not overdo how much you spend on the stock market because next time you may lose all the money that you earned this time.

Do your research for each potential investment. Try to get acquainted with whatever you plan to buy, be it a commodity or a company. While doing your research and knowing how the investments you plan to invest in are faring may not necessarily translate to profits, you should still do some form of research. The stock market may not always behave rationally, but hopefully as an investor, you have. You never want to go into losing propositions, and only by doing the research necessary will you find that out. You should also do research on more companies or other investment than what you plan to buy. Always be aware of all the opportunities that may be out there so that you choose the best one.

Be aware that t here are always opportunities. It's quite likely that you will miss out on some opportunities. However, hopefully you will also cash in on some of them. No matter what the season or what time of year it is, there will always be opportunities. Don't regret missed opportunities. It's just a game. Instead, move forward and find other opportunities. Learn from the mistake if you can.

Choose your own style. Everyone has their own style of investing, and deciding what works and what doesn't. Try to follow your own style. If you end up wrong, perhaps you can change it if you wish to. Just don't get caught up thinking that there are right and wrong ways of choosing companies and when to buy or sell them. Your style may be good as anyone else's.

Investing money should be an enjoyable and hopefully profitable endeavor. Feel free to get your money help you make money, as it will be the most efficient use of your resources. What you eventually do with the money, whether to further invest or to actually spend it, is up to you, but hopefully you will have gained some pleasure in the process itself.

In summary, to invest money successfully,

A. Invest safely.

B. Diversify your investment.

C. Determine how much you are willing to lose beforehand.

D. Do not get addicted.

E. Do your research for each potential  investment.

F. Be aware that there are always opportunities.

G. Choose your own style.

Life Skills > Money Management Skills > Investments:  Successfully Making Your Money Work For You


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Last Checked 2015