8 Sure-Fire Stock Investment Strategies

investment strategies

The lure of investing in the stock market is interesting and even a little glamorous for most people. The idea that you can put your money someplace and have it grow is intriguing. So, you might be surprised to learn that only 12% of the UK population has invested in the stock market. Are you interested in joining others in investing in stocks? Does the idea of growing your money through the stock market sound alluring to you? While for many people, it sounds like a good idea, most don’t have any idea how to get started. If you’re looking for investment strategies to buy into stock and shares, read on for more information.

1. Informed Decision Making

If you want to make money in the stock market, you need to have some knowledge. Then you need to use the knowledge to make informed decisions. 

Many people approach investing using simple name recognition. Oh, I recognize the name of that company, it might be a good idea to buy their stock. Yet, they don’t really know anything about the business model of the company or their track record of making money. 

Before investing in the stock of a company, you need detailed information about the history of the company and its projections for making money. 

2. Following the Herd

Don’t make stock investment decisions just because someone you know did. Don’t follow the pack when it comes to making stock investments. 

If everyone chose to make stock investments based on what others were doing, they all should hope the first person who led the pack knew what they were doing. 

It might be easy to make stock purchases because your family member or neighbour made the same purchase. But the truth is, you need your investment choices to be more informed. Refer back to number one on this list and do your homework.

3. Avoid the ‘Time the Market’ Approach

You, nor any other expert, can predict the ebb and flow of the market. Some who try to make a quick stock market buck will want to time the market and get in during a tight window. 

This approach over the long term just doesn’t work. You want to be in the market for the long term, it’s ultimately how you’ll make money. You can’t really guess the highs or the lows. 

Instead, invest in and be prepared to invest in a way that’s for the long term. Ultimately, most experts agree it’s how you really make money in the market. 

4. Understand the Business

Most people will say they are investing in the stock market. This may be true but ultimately as an investor, you want to invest in a business versus a stock. 

You should understand the business you invest in. Don’t invest because you know the name, know the business they are in instead. 

When you understand the business, you’re likely to understand the factors that might impact the success, or lack of it, of a business. A business’ success can impact its stock prices, after all. 

5. Invest With Discipline

The simple fact is that the stock market can be more volatile than other types of investments. What makes it volatile can also be unexpected making it hard to plan for. 

If you invest in the stock market, you should approach your investment with great discipline. This means you make fact-based, educated investments and you don’t get skittish during the inevitable highs and lows of the market. 

You should invest and be patient for your money to grow over the long term

6. Avoid Emotional Investing

Most people would agree it can be challenging to not get emotional about their money, good or bad. You should not make emotional investment decisions.

You don’t want to make a decision to buy or sell based on an emotional decision. It’s a quick way to lose money. 

Many people have fallen into the panic trap while investing and made bad decisions that have cost them money. 

Go back to the idea that your investments should be based on informed and knowledgeable decisions, not emotional ones. Keep your expectations realistic and understand the market can be volatile and you need to be careful to avoid emotional decision making.

7. Think Diversification 

While it is important to be knowledgeable and informed in your decision making and you want to invest in companies you know. Another key to successful investing is diversification. 

Diversification means you create an investment portfolio that is varied enough to reduce your risk in the market. If one area of stocks struggles, you have enough diversity in your investments to handle the ups and downs that naturally occur with stock investing. 

One important consideration when investing is your personal threshold for risk. All investing involves risk.  Often the greater the risk, the greater the opportunity for making money, or losing it. You shouldn’t invest with a level of risk that will make an emotional investor. 

8. A Financial House In Order

Investing for the future through the stock market, or other means is a great idea. Yet, it doesn’t make sense to begin investing money if you don’t have your own financial house in order. 

Let’s say you have significant debt from credit cards. It doesn’t make sense to use your assets to invest only to make a smaller percentage than you are paying in interest.  Instead, before you start investing, pay down debt and make sure you have the assets in place to make the investments, especially over the long term.

Investment Strategies for the Stock Market

Use smart and calculated investment strategies to grow your money in the stock market. Don’t make emotional decisions and be prepared to invest over the long term. 

For more financial information and help with your wealth management, we can help. Visit our blog for more opportunities to learn and plan your financial future.