Debt Views

Don’t get greedy

A wise man once said of stock investments that you have not made of lost anything until you have sold the stock. This is one mistake that many investors (both amateur and professional) make. In order to avoid the same mistake you need to understand the difference between realise and unrealised profit.

If you bought $1,000 of stock in Company X 6 months ago and since then the stock price has doubled your unrealised profit is $1,000. The common mistake is to think “ooh this is great, i’ll just hold the stock for another 6 months and make another $2,000. Big mistake. Instead you should consider realising some of your profit by selling some stock. Before you do try to reassess the stock again and treat it as if it were a new investment. If you still believe the stock offers value then maybe hold some or all of your position.

Ignore you emotions

Another great thing to do if you want to learn to invest money successfully is to ignore your emotions. Many poor investments (and friendships lost) have been made because someone has been approached by a friend with an investment proposal, maybe in their business or a friend of a friends venture. If you have these kind of personal or emotional links to an investment you may find it much harder to exit the investment if things don’t go as expected. Also on the other hand you may find it harder to walk away and take a profit.

Don’t run before you can walk

The key to successfully learning to invest your money is to make it a gradual process. If you go from a base of zero knowledge to try to start spread betting on the commodities markets you are doomed to fail. Read around the subjects and areas of investments you are interested in and ensure you fully understand each market you will enter before investing your hard earned money!