How to become a better investor

The best thing for new investors gearing to expand their portfolio is to remain in the stock market for a long haul

How to become a  better investor

As we have moved into another year, questions surrounding the Budget and finances remain in the open. Here, investing in stocks seems to be a sensible way to cement a better future.

Yet, for new investors, learning the ropes of money management and building an enviable investment portfolio can be a task full of trials and tribulations. Often, while amassing great amount of wealth in a short span of time, one fails to give proper attention to the way the money is invested.

For some, it comes down to a lack of interest in investing, finance or money management. Whatever may the reason be, wasting money on faulty investments proves to be detrimental — be it for a short-term or longer-run. Although to finally achieve success in life, one needs to come across the ups and downs of this market, minimising the losses to a nominal level is a prudent move.

Here are a few significant tips, to make 2017, your “breakthrough year in investment”:  
Be a proactive learner.

Most of the intelligent investors are found to have a common trait; that of being proactive learners. They spend more time studying the market than the average investors.

They are also voracious readers, taking books of famous investors for close reference. When it comes to investment, one should always ensure that, their chalice of knowledge must never be full, to give rise to fluidity in financial decisions. Constant upgrading helps in awareness of newer and better ways to invest.

Plan out every move, set up a Budget and make notes of the profitable steps to take. After formulating cash flow, cost of capital and research, begin with evaluating project at each level before investing into it. It helps to accomplish the project and achieve long-term success in a speedy fashion.

Do not get hassled by daily market volatility
It is of a general opinion that, with the influx of cash flowing in and out, the market is bound to be unpredictable. Novice investors are too easily inclined by this ups and downs and regularly try to time their investing. Yet, it leads to a futile effort as it is nearly impossible to time the ideal moment to get in or out.

Financial cost averaging or investing at regular intervals will aid in stabilising the highs and lows.

Here a simple logic is, the fluctuations of the market on one given day are unlikely to have serious consequences to the investment money, meant to be withdrawn in distant future.

Understand your existing portfolio, before making further investments
Humans are essentially, born with an inherent trait of multi-tasking. Although it acts as a timesaver, we often end up committing ourselves to multiple tasks at a single time, leading to a confused mind. Jumping from one investment to another is not always a prudent idea.

An investor should always avoid investing in multiple, poorly researched sections as it increases the probability of risk, chaos and mess. So, craft a check list of questions to ask yourself; alongside, deep-dive into historic and present background checks. This would effortlessly save you from unnecessary stress and losses in trade. Money invested judiciously would help in consolidating your business for a longer term.

When pursuing new investments, think about what will succeed in future
The best thing for new investors gearing to expand their portfolio is to remain in the stock market for a long haul and see market pullbacks as buying opportunities. You need to really think about what is going to have long-term value while considering stocks.
Ask yourself, what is going to be worth a lot in 2020 and what would stand to earn a lot between now and 2030? Today, startups are a beneficial sector to invest in since; they have powerfully boosted market profitability to an enhanced level.

Conclusion
Investment isn’t as complicated as it appears to many. Today, the more complex your investment strategy is, chances of disinvestments increase. With a keen acumen and a good grasp over the investment industry, you will be set to make valuable choices that would impact your future for better.

(The writer is Co-Founder and CEO of Rise India)

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