It isn’t easy to find investment opportunities and anyone can fall into many traps while seeking that. Here is how to avoid them.
By Guy Avtalyon
Someone would say: We all know the basic words to successful investing: Buy low and sell high. But it isn’t so easy to find good investment opportunities.
What else or different you can tell us?
First of all, I have to tell you that investors need to have rules.
Otherwise, the common saying can be difficult to perform, especially when many of your friends and colleagues are doing the opposite. If you don’t have a solid structure and order you are predestined to fail.
Investing or trading is like a robotic work, without emotion and always strong adherent to your rules.
You can find more and more investment opportunities opening themselves up to the investors. But not all of them are good investment opportunities. In fact, so many opportunities have drawbacks. First, you can be confused and may not pick the right one. Second, you might want to pick too many. That is dangerous per se. You can end up running like a headless fly, monitoring too many stocks, with investing more than it is reasonable. Hence, you may neglect something very important for your investment goals and financial security. The consequence easily could be your empty bank account or you’ll end up in debts.
The following are things to look for when finding an investment opportunity. If some investment opportunity has most of these things or all of them, you are looking at one that is likely to bring you wealth.
For example, if you don’t see yourself owning stock in a company you are looking for in the next ten years, then you should stay away from investing in that company. Most of the money made in business investments come from owning stock in the company. Investors are leaving it alone until the value rises and reinvesting your dividends versus rapidly buying and selling your stock in a business. That is the so-called long-term viability.
You have to measure the risk involved in a market investment against the potential reward. A good ratio is one to three. After that, you should set up a maximum acceptable loss.
What is the first rule of investing?
Determine the baseline value for an investment or trade, and wait to buy it until the price is below what is reasonable. When the stock market declines and other investors panicked and start short selling, that is the best time to look for buying opportunities. Ideally, you want to purchase an asset after the price falls significantly, with the expectation that it will rise again in the future and produce a good return.
All rules of investing
The second rule of all investment is to SELL HIGH!
After the price rises dramatically it is time to consider selling an asset. This is often a time of stock market growth when many people are impatient to buy into a rising market. When some investment shows significant gains, this is the ideal time to cash out and lock in your return. You could gather the income into a secure investment or look for a new underperforming asset and try to repeat your success.
How to find investment opportunities?
The golden rule is to LEARN FROM YOUR LOSSES! Yes!
In trying to buy low and sell high, you are forced to make some mistakes. If it is easy to buy low and sell high, everyone would do it. Try not to lose sleep over it or give up investing altogether when you lose money on some investment. Maybe you just have to take a break for a while and later capture market returns with an index fund. Or you will learn to more carefully research investment before putting more than you can luxuriously afford to lose on the line. Your fears can’t be the limiting factor that mutes your potential. Let that storm be the fuel that moves you to success.
Where to find investment opportunities?
Use your fear to produce better outcomes!
You should have a list of the investments you have made in the past. Think about what you could do to produce better outcomes in the future. You can get colossal insight from physically writing down outcomes you would like to avoid. That can prevent you from making emotional investment decisions. If you have a financial planner or adviser or someone else who will look over your investment ideas, that adds gravely deeper layers of reliability and responsibility.
You have to have a plan to avoid later regrets!
Of course, that large loss can cause you to regret because of bad investment decision. There’s also the regret that comes from watching other investments got wings. When you have a good plan of inventorying and you analyze your investment options often, that can help avoid a negative result. Writing it down makes it easier to stick to a plan.
Ultimately, investing is about finding the lifestyle that you want to live. So, you can’t do that if never find good Investment opportunities.
Choosing wisely may produce enough wealth to allow you to retire sooner or walk away from an annoying job. All you need is to use logic and stick to a financial plan to successfully build wealth.