As an entrepreneur you have to always remember that “The more you risk the more you can earn”. Many investment strategies are carved with this notion in mind.
Don’t be scared to take risks. The important thing is to, overcome the mistakes and reach your goal.
However there are certain mistakes you cannot afford to make investor. Tom Brown, financial Analyst at City FALCON financial advises investors to avoid making bad investment decisions.
Read: 8 Mistakes entrepreneurs make when pitching to investors
It is not advisable to invest in “fashionable” assets. When supplies exceed demand, prices drop. “In a situation where there is an excessive demand for some assets with a view of its sale results in the rapid growth of prices, called bubble, don’t forget that any bubble is known to eventually bursts”. Take the Dutch experience during the booming market of tulips captured all: florist, businessmen, civil servants, small shopkeepers and even footmen. All bulbs are bought for resale. In 1636, the price of a tulip reaches the value of a home. But when supply exceeds demand, prices have dropped on tulips many times, which led to the ruin of many hapless speculators. Do not make the same mistake
Don’t rush to sell shares after the bad news. You must first of all assess if it’s the “beginning of a downward trend in the market, which will lead to large losses”. Don’t be quick to sell shares after a slight drop in prices. If you do that there are professional players and fraudsters, who make good on this.
Read: If you believe in your idea, invest yourself in it
Playing in the financial casino is highly risky. It might seem simpler and easier to buy stocks, wait for the market growth, and sell them at a profit. Investors who do this often take the money in a loan secured by a personal property. The risk in this is that if the market falls, investors are left without money and without property.
Most investors are in a rush to get everything all at once. Take your time. “Choosing the best stock, they immediately put it in a large amount. And then we are surprised when this stock lags behind the market or brings losses. This happens only because the rules are neglected investment diversification and gradual entry into the market. The worst part is not even that these investors lose money, but the fact that they have a stable allergy to any further investments in the stock market”
Read: 10 Secrets for success from 5 self-made billionaires
These are some rules to follow as an investor to avoid bankruptcy:
“Formulate your vision, taking into account the investment objectives, attitude to risk, age and so on. Otherwise, the scope of the investment will be for you a cat in a bag”.
“Start with simple tools (such as mutual funds), and as they gain experience, go to the more complex. The same principle should be applied when choosing a strategy – start with a conservative and move to more risky”.
“Stick to the chosen strategy, not trying to catch a dubious success. Investing in the stock market is calculated on the horizon for at least two years. The investor often simply doesn’t make friends with a calculator or lazy to properly examine the object of investment. More often stocks bought simply on the advice or example of friends amateurs”.
“Reduce the risk of loss due to diversification of the portfolio and the gradual entry into the market”.
Read: 10 Life lessons that will help you run your own business successfully
Investing is a long journey. One that you must commit to every day and get better at it. There is no winning formula that works for all, but the above investment strategies will surely go a long way to help.