After scouring the web for the best tips in investing, here are a summary of 5 great tips from several investment websites.
1. Keep the appreciating and sell the depreciating
Well, generally investors make profit by selling appreciated stocks and keeping depreciated stocks hoping for a come back. An investor has to know when to sell because stocks may sink to a point where there is no value left. It’s certainly ideal to keep high quality stocks and sell the lesser ones but it is hard in reality. Sometimes we limit ourselves when we stick to a personal rule that is too limiting. For example, one may have a rule of selling stocks after gaining 4X back the initial investment but loses out on the opportunity to gain the most out of it. It is important here to note that gaining a thorough understanding of the potential of the investments so as to prevent personal rules from being random and limiting.
2. Following tips
Investment certainly is a type of gambling. From time to time, there may be “hot tips” coming in from friends and relatives but no one in this world can ascertain that a certain stock will rise or fall. Sure, they may be right of lucky, but it isn’t how long term investment works. Good investors analyze and research out a particular company first before investing their hard earned money. Being informed is the only way to be successful in the long term.
3. Low-priced Stocks
It is wrong when we say to ourselves that we are taking very low risks and have nothing to lose when we buy low-priced stocks. Whether if it is a $10 stock that drops to $0 or a $80 stock that also drops to $0, it is still a loss. The money used to buy it initially is gone. A company with a higher price is less riskier because of the rules placed on it.
4. P/E Ratio
This is a term where a lot of emphasis has been put into. To base a decision on whether to sell or buy stocks on the P/E Ratio is very dangerous. Sure we can analyze the market’s valuation of a company’s shares relative to the wealth of the company but comparing it between industries, countries and time periods is ill-advised.
What are your tips?
Definition of what it is all about.
Get Rich Slowly
General Investment Tips
Stock Investment Basics
Investing in Stocks