The Wrong And Right Way To Stock Investing

The wrong and Right Way to  Stock Investing

 

Stock investing is one of the ways you can build wealth starting from zero. That is when you do stock market investing the right way.

There are three ways you can use stock investing to enhance your financial fortunes:

  1. You may invest in the market for active income
  2.  Save towards your retirement.
  3. Or accumulate wealth through stock and leave a legacy for your family future generation

 

All three financial  or a combination of these objectives are possible for any investor who knows how to do stock investing right

 

The experience of stock investing that most investors is to of lose money in the stock market. The truth is you can minimize your loss investing in stock at the same time build wealth

 

Majority of investors in the stock market lose money because they do stock market investing in the wrong way

 

A   study done by University of California’s Business school into the behavior of individual investors in the stock market found that most individuals do stock market investing in a  way that  had negative result on their long-term financial status

Some of the behaviors identified among individual investors include:

  • selling winning stocks while holding on to losing investments
  • are heavily influenced by the news and past performance of a stock
  • engaging in stock investing in such a way that gave them as if they were gambling
  • holding a large proportion of stock investments that are not diversified

 

 

The wrong way to investing in stocks

 

In my opinion, personal experience and from research into stock market investing the following are the wrong way you can do stock investing

 

  1. Lack of a financial plan for investing in stocks.   If you don’t have a reason for investing in the stock market, then don’t invest. What you should do instead is save your money in a safe CD
  2. Investing on hot tips. The absolute worst way to invest in stocks is to buy shares because you heard the financial news pundits talking about the “next big stock” to break out and
  3. Investing for a “big break”. I am sure you have heard of stories of investor who bet their whole life savings on a particular stock and then lost it all.
  4.  Investing with no exit plan. That’s a sure way to lose money because you cannot predict the stock market
  5. When you hold on to a losing investment because you love the stock not your money

 

The right way to investing in the market

On the flip side, you can invest in stock like warren buffet and bank profits from stock investing…

Here’s the right way to stock investing my honest opinion and from experts that you can use to build wealth

 

  1. Have a plan and goal before you start investing in stocks
  2. Do your own research and learn how to analyze the market
  3. Do asset allocation so that you can lower your risk and diversify your investment
  4. Remember stock investing has inherent risks. You may lose your money. Focus on the risk and determine it for each investment you buy
  5. When buying a stock determine your entry price and don’t try to chase its market price
  6. Always put in place a stop to minimize your loss and protect your money
  7. Keep your winning investments and get rid of your losing investments
  8. Have an entry criterion when you invest and your head when you buy stocks.
  9. Don’t let your emotions rule the investing decisions you make
  10. Invest in the stock of companies that are recession-proof. These companies will outlive you and you can pass the investment to your future generation

The bottom line to stock investing is when done the right way you’ll build wealth and enjoy an enormous gain. When you invest in stocks the wrong way …you’ll only have yourself to blame

 

 


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