Five Tips for Beginning Investors

 The headlines these days definitely grab your attention: “Another Bank Closes Its Doors!” “Financial Giant Comes Crashing Down: Wall Street Littered in Financial Debris!” Presidential candidates engage in a critical debate over what is to be done about failing markets, high energy costs, and many other important economy related issues (that, frankly, it’s doubtful either one of them fully understands.) But no matter what your situation, no matter what your status, it’s clear that something must be done and soon… right?

Sure stuff has to change, but these five tips for beginning investors will help. Things are crazy in the markets as I’m writing this. But should you be filled with the same panic as the news headers? Not at all. Simply put, we’ve had worse.

That’s not to say that things are “business as usual” successful or even close to that. They’re not good and we’re all feeling the fallout. But by taking a look at the lessons history has to offer us, we learn that, despite the apocalyptic sounding reports from the news agencies, it could be a lot worse than it is. It is serious, but these things do happen. For the person examining investment opportunities, maybe for the first time, I would imagine it is likely sounding less and less appealing. But things will eventually work out, so don’t let yourself be scared off for good. If, sooner or later, you should decide to enter the exciting and ever-changing world of investment, here are, in my humble opinion, the five foundational behaviors that you need to master if you want to succeed in any market, good times or bad.

  1. Don’t Panic: This is, perhaps, the most difficult thing I, personally, had to learn about investment… and it didn’t come without cost. With so much money on the line, it’s difficult to keep your head when things turn south for a while. But if you lose control of your emotions you will probably also lose the money you’re stressing over. Stay steady, think it through, manage your fear and other emotions to your benefit. Many will read this and roll their eyes, but I feel it’s important to mention. It’s amazing how many “investors” lack this ability and pay for it.

  2. Research: Examine where you are at. Examine where your money is at. Take a closer look at where the market is heading. You may have to make your decisions quickly sometimes, but be sure to do your research just the same. Plan ahead and keep up to date so that you don’t compound your risk with baseless assumptions. Ask the tough questions and find the answers. It is vital that you not just be aware of the risks, but that you understand them.

  3. Rethink: How are your investments performing? Is a downward trend likely to continue for long or is it appearing to bottom out? If the market with your money is still looking sickly, don’t be afraid to reconsider not only what you are doing with the investments you have, but where you want to place your assets in the future. There are recession resistant industries out there. There are products that don’t feel the pain of the markets like the others. In fact, there are industries that may even come out on top because of that pain. If you are that worried (see behavior #1), find them.

  4. Count on Disappointments: I once had a friend who described how he managed to overcome the anxiety many feel about their investments. His method of coping was to consider his invested money gone for good from the moment he agreed to the deal. I asked him why he would hold such a pessimistic view on the outcome of what, I was sure, was a well informed decision. His abbreviated response was that, when it came to considering his money wasted, he was just fine about being proven wrong. We laughed for a bit about that, but then he mentioned to me that, all too often, he was proven right and that he had occasionally lost a lot of money for it. I asked him how he could have such bad luck intermingled with all his major successes. Isn’t that why you do the research? The answer was yes, but until someone develops an accurate crystal ball of sorts for investment, even the best out there cant always tell what’s coming. You will win some, you will lose some. Make sure that you can afford it either way.

  5. Be Picky About Your Financial Advisors: Be tough. Make them earn your patronage through service and results. Do not hesitate to ask the questions they don’t want to answer about their product. If they don’t have the answers, don’t use them. There are enough competent advisers out there to allow you to shop around as much as you need to. Remember that it is not their money they are spending. It’s yours. Do you trust them with it? If you are placing your hard earned assets into their hands, you had better be sure you do.

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