Whether theyre working in the business world or stay-at-home mothers, many people today are drawn to the risky allure of investments, which can mean either huge rewards or painful losses. While its impossible to predict the fluctuations of the market with 100% accuracy, as you build your portfolio, you will learn to accept the losses and keep in mind the successes always waiting around the corner.
No one can control the market, but you can control what you invest in. Research products and know the businesses youre putting your trust – and, more importantly, your dollars – in. One of the most common errors new investors make is jumping to invest in a hot stock from the previous year. Its a common pattern for a market high to descend to a market low – right at the time youre investing. This is not always the case, but it pays to invest in a strong stock rather than a fad thats in one year and out the next.
Its also important to know why youre investing in that particular stock. For instance, if you invest strictly to gain some momentum, when prices fall youll know to drop out; otherwise, youll sit there wondering whether to wait it out or cut your...