Investment could be both a pleasurable adventure and a headache, and many of you may be wondering how to invest into stocks, so as not to lose your nerves and money. Unfortunately, there is no way to predict the future and reduce the risk of loss entirely.
But… There are different strategies and recommendations for investing in stocks, which can help to reduce risk.
Here’re our 8 shares investment tips:
What’s the plan?
Before investing money into stocks make it clear for yourself why you are doing this and what’s your aim. Maybe you need to pay for your children’s education in future, or you want to earn for retirement, or to buy a car.
When you have the aim, it’s much easier to buy assets instead of buying a cup of flavoured and super tasty coffee.
When you determines your aim, researched your assets and decided what exact amount of money you will invest every month it is easier to stay on course and to plan.
Investment is a long-time journey
Don’t expect that right after you’ve invested you’ll gain profit. It’s better to consider long-term investments, as firstly, slight bad changes in assets’ growth won’t be so risky as you will have a lot of time. And secondly, you’ll simply gain more profit during, for example, 10 years than during 1 year.
“Big things have small beginnings”
At the initial stage, you will not be able to make decisions with a cold mind, so don’t invest all the money you have as there’s a huge risk of losing everything. Even in the case of failure at first, you ideally should think about the reasons for the wrong decisions and draw conclusions for the future: work on mistakes. And this would be impossible if your head is busy thinking that you have nowhere else to live or don’t know how to repay the loan. These are, of course, exaggerated examples, but just right for understanding. Even the loss of a monthly salary is quite tangible for many. So start from small amounts and step by step go higher.
Green light sometimes means “Stop”
When a beginner looks at the company’s statistics they may consider only the companies with green “candles”. But it’s not that simple. Sometimes companies whose stocks have fallen may have a bright future, so you can buy cheap and sell expensive. On the contrary, stocks of a “green” company may fall and you’ll lose your money. That’s why before investing it’s tremendously important to analyse the company. Which leads us to the next step…
Make your investigation, Sherlock
To minimise risks, before buying stocks read the company’s statistics for the last several years. Maybe now its shares are growing due to some unique circumstances but it won’t take long for the situation to change. That’s why you need to analyse the company. Online trading apps usually provide users with information on companies. For example, in the Orca app you can observe statistics for a week, a month, half a year, a year and so on. Moreover, there’s information about the company and its owner, data on the revenue growth per annum and much more, so you can make your decision wisely.
If you master information, you master the whole world
To read all the information about the company is wise but how to choose the right company? From what sphere should it be? Big or small? AAAAAH, HELP!
Don’t worry! There’re ways to deal with it.
Of course, you can use your intuition to choose the right company but we don’t approve of such a method. For every investor it is essential to be informed about the latest news. We mean not only financial news but also world news as stock prices may differ under the influence of many factors like pandemic or Elon Musk’s tweets.
So, to be alert, check the main world news in the morning and in the evening.
“Never invest in a business you can’t understand”
Famous investor Warren Buffett once said this phrase, and you should remember it when deciding what company to invest in, as it’s one of the best stock tips ever. You can read the news every day, watch the statistics and so on, but if you don’t understand a thing of what the company’s doing, it will be hard for you to make proper investment decisions.
For example, in the news they wrote that the company you’ve invested in has a slight decline in selling some products. And you start panicking and thinking of selling its assets, but actually this decline is so insignificant that those who are familiar with the field don’t worry a bit.
So, try to understand the business you invest in and find the assets to invest in in Orca’s collections.
Difference makes difference
There’s one investment term called “a diversification of portfolio”. Basically it means that to reduce risk you should buy different types of assets from different fields. For instance, stocks of some tourism companies have fallen (as during the pandemic), and at the same time stocks of pharmaceutical companies have risen. If you invested in companies from those fields, as a result you wouldn’t lose everything, and profit from pharmaceutical stocks will cover losses from tourism stocks. Magic!
So, now I can invest?
Yeah, you can use our stock investing tips and start investing if you think you’re ready. Of course there’s a lot more you should know but we believe you’ll grow as an investor with experience.
Orca does not provide investment advice. If you have any doubts, you should contact an investment adviser. Terms and conditions apply. Your capital is at risk.
Orca is an appointed representative of RiskSave Technologies Ltd, which is authorised and regulated by the Financial Conduct Authority (FRN 775330).