My best investment tips 2020
In order to succeed in the long term on the stock market, I think it is really important that you have a fundamental strategy that you are comfortable with and that you believe in.
But remember that all investments are associated with risk where the question you should ask yourself is – how much risk am I willing to take?
Below are the dreamer’s (ie my) best investment tips.
It is important that you have a strategy for your investment so that you have the strength to stand still even when it is windy. There are as many strategies as there are investors and there is no “right” answer to which strategy is best. I think the most important thing is that you are comfortable in your investment so that you do not start to feel bad at times like these when the stock market crashes. I have a very simple strategy that I follow in wet and dry.
Diversification: Different countries, Different industries, Different companies.
As a rule, only large “the largest” companies
All companies must have historically strong finances and be shareholder-friendly, ie have a good dividend history.
I invest “almost” only if I get at least 3% direct return
2. Do not put all eggs in the same basket
It does not have to be wrong to invest narrowly in companies that you really believe in. However, this is not the strategy that I have chosen or that I would recommend to someone who is new to the stock market. Of course, you can make a lot of money quickly if it goes well, but you can also lose a lot of money quickly if it goes badly. I usually have a fairly simple portfolio strategy that says
The portfolio must contain at least 10 different companies from several different industries
I want to own both shares and mutual funds
3. Invest Long Term
Most people who invest in the stock market recognize the following mantra “Never invest money that you plan to use in the near future”. It is a very wise saying that becomes especially prominent in times of need. The investment horizon should be at least 5 years and preferably significantly longer to provide the best possible return. However, it is important to remember that there are no guarantees on the stock exchange – there is always the risk that your initial investment may fall or, in the worst case, disappear.
At least 5 years investment horizon
4. Invest in industries and companies that you understand
With today’s information society, I sift through to the crowd that does not think you need to be particularly technically savvy in the companies’ details. On the other hand, I advocate that you should basically have an interest in your investments. By that I mean that you should read about the companies before investing in them. In addition, I advocate that you should follow the news about the companies while you own them. In addition, you should understand the business side of the company in which you invest – otherwise it will be difficult to even guess how it will go for the company in the future.
Understand the companies’ business concept
5. Reinvest the dividend
It is never possible to describe how crucial this point is for your future total return. Your reinvested dividends will generate even higher dividends in the future and so it continues in a (potential) infinite loop. At the same time, it is important to understand that if you follow this principle, to reinvest the money instead of picking it out, you risk losing all or part of its value.
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