Rights & Money

4 Basic Tips for Investing

When you’re trying to get a handle on the complexities of the stock market, it can be easy to forget some basic truths

By Katrina Caruso

If 2018 is going to be the year that you focus a bit more on managing your investments or decide to become a more active investor, here are four things to keep in mind.

Experts Aren’t Perfect
Professional money managers and investment advisors are experts in their fields, but even they make mistakes. For example, they can be stubborn or convinced that they know best and as a result stick with a losing stock only to lose a lot more money later on. So, be careful and follow your gut if you feel that your advisor is letting his or her emotions take over. It’s also a good idea to educate yourself about the stocks you have, so that you can make more educated decisions. The more you know, the better.

Safe Stocks Aren’t Always Safe
When the market dips, even stocks normally considered safe aren’t—and they may lose a lot of money. There is no such thing as a truly safe bet when it comes to investing. Investing always involves an element of risk.

Rumours Should be Taken with a Grain of Salt
It’s not a good idea to base an investment decision on stories about a takeover or a massive expansion—because all rumours are is rumours. The stock might surge quickly when such news is leaked, but that can lead to a lot of lost money down the road if the takeover doesn’t happen.

Don’t Ignore Stocks
It’s tempting and even normal to shun a particular company or industry after having a bad experience with it, but one misfortune shouldn’t cause you to turn your back on one sector or stock forever. You might miss out on a good investment opportunity. Remember that things are always changing in the stock market, and that means that you should never say never when it comes to investing.

Photo: iStock/gopixa.