Stock Investing,Trading, Investing Software, Trading Software, Online Trading are functions of your specific needs and goals. Each investor has different objectives that need to
be met depending on various factors such as, age, income, job security, and tolerence to risk.
Stock Investing Goals
Stock Investing Needs:
You may have specific goals and
requirements that you want your investment assets to fulfill. For example, you may be funding college for children, business expansion, or retirement needs. You
should identify these goals and needs clearly.
Your age is an important consideration when deciding how much risk to assume. Portfolio assets that are riskier and that will fluctuate more over time may be appropriate for younger investors but not for others. An individual who does not expect to liquidate the assets in his or her portfolio for a number of years has more time to recover from a market downturn, while an investor close to retirement may be more likely to prefer less volitile assets and stress, capital preservation.
Age also affects the choice between income-earning securities and those oriented toward capital appreciation. An investor who is employed and near peak earning power will probably want to minimize paying taxes, and will therefore lean toward investments that do not provide current income.
Income: Both your absolute income level and your income
requirements influence your investment objectives in several ways. First, income, like age, influences the choice between dividend-paying or interest-paying investments, and those whose primary return is in the form of capital gains. You may prefer income-producing investments if you are retired and need to supplement or replace earned income. Your income level also affects your investment choices because it determines your tax rate. Low-tax-bracket investors — generally those whose income is lower — will be more likely to prefer income-producing investments. High-tax-rate investors are more likely to choose tax-deferred or tax-sheltered assets.
Income also may influence risk preferences. High income investors may be more willing to choose higher risk investments since they can more easily contribute additional investment capital should they sustain losses. When you recognize the need to convert your assets into cash at the appropriate times. Do you require a portfolio that can be liquidated easily, or can you afford to wait? Since greater liquidity generally results in lower return, it is necessary to give serious consideration to the inherent tradeoffs.
Tolerance for Risk Your tolerance for risk is a very personal decision, and a question that is difficult for many investors to answer. In general, markets tend to provide higher returns (or Losses) in exchange for bearing higher risks. Often you will find that the investments with the highest long-term returns are very volatile in the short run. It is important to be honest with yourself in assessing whether you are comfortable with market volatility, and the level you can tolerate. While it is easy in hindsight to wish you had invested in a risky segment of the market that has performed well recently, a more realistic view is to look forward at therisk that might occur in the future.
Stock Investment Tips(Long Term)
Stock Investment Tip: ESTABLISH YOUR FINANCIAL “COMFORT ZONE”
Determine your financial “comfort zone” and invest accordingly. Different people have different investment expectations and varying thresholds of risk they are willing or able to tolerate. If you lose sleep worrying over your investments, reallocate those investments until you become comfortable. A nervous investor is an investor prone to making serious investment mistakes.
Stock Investment Tip:
ACTIVELY SUPERVISE YOUR INVESTMENTS
Actively supervise your investments! This may seem like a trivial suggestion, but we cannot begin to tell you how many people we’ve heard say during the recent bear market, “I’m so disgusted with my portfolio’s performance that I don’t even open my brokerage statements any more.” Such a psychological malaise always sets in during exactly the period (a down market cycle) when even greater diligence is called for. Training yourself to properly monitor your investments during prosperous market periods will help you to maintain that discipline during those critical periods when markets sour.
Stock Investment Tip: KNOW WHEN TO EXIT AN INVESTMENT
Know when to say, “Good-bye,” to an investment position. “Nothing remains the same but change.” “All good things come to an end.” Both of these quotes, while corny, are especially germane to investing. Investment requires skill because market environments are constantly changing. Another widely-circulated quote in the investment arena is, “Cut your losses but let your profits run.” This is only partially sound advice; there is a flaw in the “logic”. Can you guess what it is? Just how far should you let your profit run — until the markets turn down and your profit turns into a loss? Before you enter into an investment position, determine both upside and downside exit points. (This often becomes too difficult a decision once your money is “in play”.)
A good way to determine a downside exit point is to determine what percentage of principal you are willing to sacrifice; once this percentage is reached, the position is assumed to be a failed one and is immediately closed. Always set a target for your upside exit point (usually a percentage gain or a “resistance level”); if your target is reached and conditions are such that you believe your investment may continue to appreciate in value, sell half of your position, set the target price as a new baseline and repeat the process, again setting both upside and downside targets.
StockInvestment Tip: KNOW YOUR LIMITS
Different investing and trading vehicles demand different levels of expertise. If you are unfamiliar with an investment or trading concept or instrument, become thoroughly familiar with it before you attempt to apply it in shaping your financial future. A great deal of money can be lost very quickly in the financial markets with very little recourse for recovery. Preservation of capital should be paramount in any financial decision.
Stock Investment Tip: AVOID SHORT TERM TRADING
Short-term trading should be left to the pros. Do not believe that you can gain the knowledge overnight that is necessary to win in a short term trading environment. Such knowledge generally takes years and a great deal of hard work (and lost money) to acquire. Most short term traders simply “lose their shirts” and are “washed out” of the markets because they are ill-prepared for the experience. Don’t be one of them!
Stock Investment Tip: STAY TUNED TO LONG TERM MARKET TRENDS
Market timing, taken from a longer-term perspective, can be a prized tool in your arsenal of investment techniques. The philosophy of “buy and hold” has worked extremely well over the last 20 to 25 years, but may not continue to do so in the future. The notion that the market “will always come back” is specious, as those who suffered through the recent crash following the “tech bubble” now know all too well. When investing, attention must always be paid to macro-economic trends that can influence markets in general and fundamental information that can affect your particular investments.
The Ten Spider Investment Center empowers individuals and entrepreneurs by delivering up-to-date investment and personal financial information and resources.