Smart Tips to Become an Intelligent Investor

Spread the love

Latest Posts

You need to understand what investing actually is? Investment is the purchase of goods that are not consumed today but are used in the future to create wealth. All you need to know to get started is that there are three big types of investment; asset classes

  • Stocks
  • Bonds
  • Cash

Stock is just ownership in a company, and there are 2 ways to make or lose money in the stock market. You see when you own a stock; you actually own a piece of company and as the value of the company increases, the stock price goes up. But if the value of the company decreases, the stock price goes down as well. These ups and downs determine the amount of profit or loss. The second way to make money is when company shares its yearly profit with you in the form of dividend. Stock prices can go up and down dramatically for all kinds of reasons, as a result of stocks are riskiest types of investments. But whatever the condition of share market is, these smart tips will always help you generating handsome profit and revenues.

  1. DON’T PUT ALL YOUR EGGS IN ONE BASKET:

Ifthe basket falls down all the eggs will break.  The intelligent investor will never invest all of his money in one company inorder to save himself from any kind of loss. He will rather invest his money in different companies. Nobody can predict who is going to be the next social media sensation but inorder to protect yourself from any kind of loss you can make investments in different companies. Now remember there are two rules of investing.

Rule no 1: Never lose money

Rule no 2: Never forget the rule no 1.

  1. NEVER TRUST ON MR.MARKET NAMED MR.MARKET:

Just assume that share market is a person that comes to your doorstep every day and tells you the shares price of different companies. Completely ignore MR.MARKET as he is not trustworthy at all. He is totally unpredictable, he is not very clever, he suffers from serious mood swings. Before the launch of any product of any major companies the share price of that company increases and if incase any problem occurs in that product, the share price of the company goes down. If the finance minister is happy, Mr. Market is happy. If the finance minister is sad, Mr. Market is worried. If you want to be an intelligent investor just ignore the market completely, focus on the company in which you are planning to invest. Intelligent investors always concentrate at the future growth of the company and that what the management thinks about the long term evolution part of the company. Intelligent investor always invests in that company which has a difference in market value and intrinsic value. Market value is purely decided by the mood of Mr. Market by which you will never get to know the actual value of the company while intrinsic value is the true value of the company including all the aspects of business. This value is calculated on the basis of company’s brand name, management, assets, goodwill, future plans and past aswell. Also learn to calculate the intrinsic value before investment.

  1. NEVER LOOK FOR CRAZY PROFIT:

A trained investor never looks for sky high profit. Indeed, his focus always remains on safe & steady return. We human beings are very good in identifying patterns. What we do is we try to find out patterns in the company’s growth as well. For e.g. if the price of any share is increasing since last 10 days, we assume that it will continue to increase in the same pattern but it does not happen and this will cause a heavy loss. The distinction between investment and speculation has always been a useful one and its disappearance is really a cause of concern. So an intelligent investor does not run after big profits but focus on companies giving balanced return. After making investment in such companies sit back and relax enjoying yearly return of 10%, 12% or 15%.

  1. STICK TO A STRICT FORMULA:

The intelligent investor is a realist who sells to optimists and buys from pessimists. To avoid emotional stress, stick to a strict formula of investment. Never forget!  Always invest 10% of your income. Just assume your monthly salary is $5000 so you should deposit $200 in your investment account and always invest in those stocks in which you have previously invested. If the shares are less expensive, do not buy more in greed and if the shares are expensive, do not buy less in misery. First stick to the formula of 10% of your income.

Whether you are just starting out or you have been investing for quite some time, you always want to walk the path of the intelligent investor. May be you would not become a billionaire in a week but I guarantee you too can turn your investments into modest but steady profits.

Author Bio:             
Abigail Kent is a passionate blogger who tend to write on trending topics. She’s currently writing for Discount Codez, an online coupon, promo’s and voucher codes site. You can follow her writings at Twitter.

 

Related Posts