Investing is challenging. I have made a lot of money in the stock market, but I’ve also lost a lot of money there as well. Early in my trading career, it was like a pendulum swinging from one side to the other. I would make money, then lose it all, make money, then lose it all. This cycle would repeat until I finally stopped trading.
I went to 100% cash, and told myself that I would never trade again until I figured out how to invest. I went on to spend months studying the experts, analyzing my trades and actions, and developing my unique trading strategy and plan. Finally, after a months-long hiatus from live trading, I went back into the market. This time with much more solid and consistent success.
Below are the lessons I was “fortunate” enough to learn early in my investing career.
These 10 “Quick & Dirty” tips will drastically help any professional (young or older), as they would have saved me many thousands of dollars had I known and acted on them sooner than I did.
1. Stop what you’re doing
Before doing anything, stop for a minute. Do not proceed until you take care of the basics. Investing is hard and expensive if you don’t have a plan. Essentially everyone is making money as the market roars to record highs, but do not be led to believe that this will continue. What happens if the market dips down by 20%? Are you prepared? It is easy to become lackadaisical when things are apparently “easy”. But before doing anything, you must have a plan. This will save you lots of money, as it would have for me when I started out! Holding your money in cash is not the end of the world. The stock market will be there tomorrow and the day after, but you can only take advantage of it if you are still have money in the future to invest!
“You get recessions, you have stock market declines. If you don’t understand that’s going to happen, then you’re not ready, you won’t do well in the markets.” – Peter Lynch
2. Set investing and financial goals
What are you trying to achieve? Where does investing fit into your wealth plan? Set your goals, and make them specific (I use Evernote to keep all of my goals)…
How much do you want to stock away every paycheck, every month, every year? Where do you want to be in 5 years financially? If you could have one financial accomplishment for this month, what would it be? And out of your investing, what are you really trying to achieve? [Read more…]