Looking for smarter investments for beginners? There’s good news and bad news.
The bad news is that there’s not a single one-size-fits-all approach.
The good news is that there are a ton of approaches that you can take with investing. It’s a matter of figuring out what works with your personal style. You need to find trading or investment strategies that work for you within the current market.
Ready to get started? In this post, you’ll learn about some intelligent strategies for investing that can be useful for traders and individuals of all levels.
Table of Contents
- 1 What Is a Smarter Investment?
- 2 5 Smarter Investment Strategies
- 3 Conclusion
- 4 One Platform. One System. Every Tool
What Is a Smarter Investment?
A smart investment isn’t just the opposite of a dumb one.
It can actually be kind of tricky to define a smart investment … You can’t necessarily make a sweeping statement about a specific style or security that’s fail-safe.
So it can be easier to think about it this way: A smart investment is one that you carefully consider and research. You take the time to assess if it works with your personal risk tolerance and investment goals.
While investing definitely isn’t a game, it can be helpful to approach the market — and your money — with the mindset of a chess player. Like a chess player, you need to think a few steps ahead, but also keep your eyes on the current status of the board. It’s an ongoing mix of offense and defense.
Smarter Investment for 2019
When considering smart investments, it’s important to consider what’s going on in the market right now.
For instance, at this moment, in early fall 2019, there’s a ton going on in the market that could affect investing. Right now, we’re in the middle of a trade war … And a lot of traders are fearful of a potential market crash or bear market.
These factors mean that you might need to employ a different strategy than you might during a bull market, or even when the market sentiment is more optimistic and less fearful.
Keep in mind: the tips discussed in this post are universal tips for being intelligent with your capital. They are not intended, nor should they be taken as financial advice.
Smart Investment for Beginners
Looking to get started with investing? Here are some vital tips for smart investment for beginners.
5 Smarter Investment Strategies
Assess Your Goals
Before you make a single trade — before you invest one penny in your account — take the time to set some personal investment goals.
If something vague like “get rich” or “make money” comes to mind, you’ll need to do a little better than that. Really take the time to think about your goals.
Goals are vital to investing because they help give you direction.
Think about getting in your car and heading to a place you’ve never been to before. What would you do? You’d program your GPS for driving directions. Or you’d at least look it up on a map before you leave for your destination. You probably wouldn’t just get in your car and start driving around, hoping for the best.
Likewise, it’s necessary to have a destination in mind when you’re investing.
By setting goals, you give yourself a destination that allows you to create a structure and specific milestones along the way. Yes, you can change directions as you go. But if you don’t at least have a direction, you’ll never maintain motivation.
Continuing with the GPS example, there is an allowance for flexibility within your goals. For instance, if you decided you wanted to go somewhere else instead, you could re-enter a different set of directions. Or, you could program stops along the way.
Goals don’t have to be set in stone … and they probably shouldn’t be. You’re bound to change over time, and your investing style may change, too. So every few months, take the time to stock. Assess whether your account is within your desired target range and if your goals still feel reasonable.
If you’re not within about 5%, figure out what you could change … or maybe alter your goals to be more realistic.
Look at Your Risks
It’s a big scary four-letter word: RISK. It may not be your favorite thing, but it’s an inherent part of the stock market and investing. So do yourself a solid. Respect and think about risk if you want to make smart investments!
You’ll need to start by considering your own personal risk tolerance. How long do you want to hold an investment? What are your specific goals? Questions like these can help you determine your personal level of risk tolerance.
Still not sure? Many brokers even provide risk tolerance questionnaires, and they’re easy to find online as well.
Your own risk tolerance isn’t the only consideration, though. You also need to think about the risks that are inherent to the market and the risks in the market right now.
As a broad statement, you’re always at risk of losing your capital when you make an investment — no matter how “safe” it may seem. Of course, some styles of investing, like day trading and short selling, carry a greater level of risk than others.
That’s part of why it’s always important to do plenty of research before jumping into a trade or investment. It’s important to know that you’re getting into it for the right reasons. You want to thoroughly consider both the best and worst-case scenarios.
It’s also important to consider the current climate of the market. For example, at this particular moment, the trade war is adding extra volatility (and extra risk) to certain sectors, such as technology.
Be sure to weigh all the risks you face before jumping in!
Look for Buying Opportunities
The changing markets can be stressful. That’s particularly true in times of economic uncertainty like right now.
However — and this is important — no matter the market conditions, there are always opportunities for traders and investors. But the opportunities and the sectors they’re in may change quite dramatically.
For example, during a time of economic downturn, companies offering luxury products are typically the first to go down the drain. On the other hand, essential products can be more stable.
Additionally, the same downturn that can bring down the share prices of steady, large-cap companies can provide the opportunity to buy in at a lower price. Of course, this approach can require patience and challenge your nerves … Things may get worse before they get better. There are never any guarantees.
That’s why it’s important to always do your research before buying a stock. Using StocksToTrade to help you in your stock research can help you spot opportunities in the stock market. As a result, you’re better primed to create strong trading plans and make calculated, educated decisions.
Finally, changing up your trading strategy or technique can be advantageous. For example, a bear market is typically when short-selling opportunities abound. Depending on the market’s climate when you’re investing, you may find the most promising opportunities in different places.
Plenty of people are capitulating right now, or selling off every investment in fear of a potential bear market. Should you follow suit during market declines? Just sell everything and stuff the cash under your mattress?
Please don’t. Or at the very least, think long and hard before you do. Patience is also part of the game when it comes to investing. You’re rarely rewarded for impulsive decisions.
But at the same time, you should probably also avoid going “all in” and putting everything you own into investments. It’s important to keep some cash on hand (but preferably not stuffed under your mattress.)
Things happen in life. Having cash on hand can help you stay comfortable if and when they do. Cash also means that you can be ready to pounce on unexpected opportunities should they arise.
This article is about smart investment … But let’s take a timeout to talk about what’s not smart: making fear-based decisions.
Losing your cool is one of the quickest and most effective ways to fall into dumb decision-making. After all, how many of your best decisions were made during times of panic?
Even when things seem dire in the market, take the time to be calculated and intelligent with your investment decisions.
In part, this is why creating strong trading plans is so vital to a long-term trading career. A trading plan is where you take the time to create your entry and exit points for the trade.
It’s your trading map of when to take profits and also where to jump ship if the trade turns sour. By having a plan beforehand that you intend to stick to, you’re less likely to make emotional decisions that could potentially devastate your account. A little planning can go a long way in helping to ensure that you’re prepared for a variety of outcomes.
There’s more than one way to invest intelligently.
Smart investment is less about a single approach and more about careful planning, self-awareness, clear-cut goals, managing risk tolerance, and of course, being prepared.
In taking the time to educate yourself on smart investment techniques and strategies, you’re taking a big step toward making the most of your investment dollars.
Choosing stocks to invest in isn’t always easy. There are so many different companies and securities out there … It can be overwhelming.
That’s why you need a powerful stock screener to help you scope out the price action.
StocksToTrade can help you find promising stocks to trade by helping you filter out the noise. It can help you focus on stocks and setups that work with your personal trading and investing style.
Created by traders, this platform offers a ton of awesome features, including:
- A state-of-the-art stock screener. Our powerful scanner allows you to run scans based on the criteria you set. Filter by indicators, fundamentals, biggest gainers … the options are endless.
- Charts, charts, charts! STT has some awesome charting capabilities. Check out price action, alerts, and news — all in one platform. It’s easy to create and maintain your watchlist with tools like this.
- Links to the news. Our news scanner gives you quick and easy access to the latest news related to the companies behind the stocks you’re considering. You get access to headlines, SEC filings, and even social media mentions.
Want to test it out? Try a 14-day trial of StocksToTrade for just $7! Check out the platform that so many top traders choose to use — StocksToTrade.
What part of investing is most exciting to you? How about the scariest part? Leave a comment and let us know!