You’re going to be crashing headlong into all kinds of terms you don’t understand, and countless people looking to undercut you. If you’re taking your first steps into the world of investment, then here are a few techniques you should really be aware of.
The first strategy we can prescribe is what people call “dollar cost averaging”.
If you know one thing about investing it’s that the markets are unpredictable. Even for a professional with years of experience, it’s impossible to make solid predictions about how this or that stock is going to move next.
Silver and gold prices today might be drastically different from their prices tomorrow. This strategy will help you avoid any pitfalls with fluctuations. Try investing a fixed amount of each paycheque, rather than buying stock once in a blue moon.
By sticking to this amount, you’ll set yourself up to buy more shares when prices are low, and fewer when prices are high.
Dividend reinvestment is another good strategy for new investors. You’ve probably heard someone talk about the returns of the stock market before. They’re usually talking about the returns assuming all dividends have been re-invested.
You can think of dividends sort of like compound interest. By reinvesting dividends, you’ll not only make gains on the original investment.
You’ll capitalise on the dividends you received through that investment too. No one’s twisting your arm to invest dividends from one stock into the same stock.
Every quarter, that big juicy dividend will be dangled in front of you. However, if you can resist the temptation to withdraw it, it will do a lot more for you in your portfolio. Some broking software will even let you reinvest dividends completely free of commission.
Finally, playing the long game. Financial guru Warren Buffet once said you should only invest in something “you’d be perfectly happy to hold if the market shut down for 10 years.”
There are a lot of options out there. However, you should always choose your investments based on two factors: Solid fundamental factors and prospects for long-term growth.
Again, iit can be extremely tempting to act on tips, and buy stock because there’s a big leap coming up. However, if you restrict your investments to consistently high-quality companies, you’ll gain more overall.
Of course, this is more to give you a solid foundation and safety net. If possible, try to keep a reserve in your account for short-term tips and fluctuations. However, more stable, long-term investments should always take priority here.