The young investor: 4 tips for beginners

A couple of decades ago, and there wasn’t really a thing as a beginner investor. Well, there might have been, but they certainly wouldn’t have lasted very long in the business.

Now, things are changing. This is partly due to technology, and one only has to look at the MT4 demo trading account to see this in full detail.

Even though tech is undoubtedly playing its part in the number of people delving into investing, it’s still not an easy business. Today’s post is now going to look at life as a beginner in more detail and showcase some of the best tips to help you succeed in the early days.

The art of diversification

The D-word has become one of the most used ones in the world of investing, so we’re going to bet that you have already come across this first suggestion. Nevertheless, its importance should not be overlooked and regardless of where you are in your investing journey, make sure you are diversifying.

Sure, if you happen to have struck lucky, putting all of your eggs in one basket can seem to have been a stroke of genius. However, more often than not, this doesn’t happen and the benefit of diversifying is so that you can manage your risk. If one stock falls, you at least have others to rely on.

Be wary about leveraging

You may have read about leverage during your research, and all of the potential riches it can bring. For those unaware, this is the process of borrowing money to fund your shares. It’s great if your share prices increase, but if things start to go downhill you can be left with a hefty bill.

Put simply, for the experienced investors they can work a treat, but for a beginner you should be cautious. The fact that Warren Buffett falls into the latter category says everything you need to know about that.

Don’t let your heart rule your head

Whether it’s trying to chase losses, or opting for your own hunch, don’t follow your emotions when it comes to your investment journey.

Again, as you start to get more experienced, you might start to develop hunches but these will usually be based on something. In other words, you should never dive into anything blind when it comes to investing; always know your subject and the figures that are driving your decision.

Don’t give into others’ hunches

We’ve just touched upon hunches, but when it comes to the opinions of other people this really deserves its own section. A lot of people are very happy to dish out financial advice when it’s not their own money that’s at stake. It’s a bit of an ego thing; if things come off, their reputation rises while if things don’t, they haven’t lost a dime.

In a similar vein to the previous section, always make sure your decisions are based on facts. Sure, you might receive a tip, but don’t invest until you have dissected all of the facts and figures and made your choice logically.

Posted in: Personal Finance

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