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5 Tips to Help You Invest Like a Pro

5 Tips to Help You Invest Like a Pro

It goes without saying that you invest with one goal in mind: to make money.

While some investments are safer than others, there is always some level of risk involved.

With all this in mind, it’s important to take a step back, assess your situation, and make changes that will allow you to invest like a pro.

Your net worth may never approach investing gurus like Warren Buffett, but this doesn’t mean you can’t make decisions that put you in better position to succeed.

If you want to invest like a pro, here are five tips you should absolutely follow:

1. Diversify

“Diversification is a protection against ignorance. It makes little sense if you know what you're doing."

Warren Buffett is the king of financial quotes, but none are more true than this one.

When it comes to investing, diversification can be your best friend. If you want to protect yourself from yourself (think about that for a second), you need to diversify your investment strategy.

On the surface, it makes sense to put all your money into the investments that are currently generating the largest return. However, if you do this, it could wipe you out should things take a turn for the worse.

2. Keep it Simple

Many people look at the many types of investments they can make and soon think twice about moving forward. In short, they believe that this is entirely too complicated for them to figure out.

Don’t let this slow you down.

By keeping it simple, such as purchasing individual stocks and bonds, you can form a solid understanding of how to invest with the idea of making money.

If you really want to keep things simple, opt for low cost index funds. This is something Warren Buffett recommended in a previous letter to Berkshire Hathaway shareholders:

“Most investors, both institutional and individual, will find that the best way to own common stocks is through an index fund that charges minimal fees. Those following this path are sure to beat the net results (after fees and expense) delivered by the great majority of investment professionals. Seriously, costs matter.”

3. Have an Investment Plan

Do you know people who throw their money at a variety of investments with the idea that something will stick?

If you take this approach, you’re sure to be disappointed with the end result. There is nothing more important than having an investment plan, as this will guide you through the good times and bad.

You don’t want to invest in individual stocks today, CDs tomorrow, real estate next month, and a business venture after that.

Sure, diversification is essential to your success, but only if you have a plan that is meant to guide you.

4. Don’t be Scared

When you think about the risks associated with investing, it’s easy to become scared and intimidated. As a result, you may be tempted to stock all your money away in a checking account.

When it comes to making sound investing decisions, fear can’t stand in your way. For example, when the stock market is down you shouldn’t be afraid to invest. This leads us to another famous quote by Warren Buffett:

“Be Fearful When Others Are Greedy and Greedy When Others Are Fearful.”

That’s all you need to know!

5. Keep an Eye on Your Results

This doesn’t mean you should obsess over your investments. For instance, you don’t want to check stock quotes all day long. This will soon drive you nuts.

Even so, you should have a strategy for tracking your results and making informed decisions as a result of what you find.

With this approach, you’ll know which investments are providing the biggest return. Subsequently, you can adjust your plan to take full advantage down the road. 

Conclusion

If you want to invest like a pro, if you’re tired of making poor decisions, these five tips will put you on track to bigger and better things in the future.

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Comments 1

Frank on Friday, 30 June 2017 14:58

Keep fees down! Always look at how much it will cost to own this stock or investment.

Keep fees down! Always look at how much it will cost to own this stock or investment.
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Thursday, 22 August 2019

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