Many different theories are floating around the internet on how to invest, when to buy and when to sell. Today I will be discussing 5 different tips and tricks that have worked for me and a few things that didn’t!
- Do your research.
Before buying a stock, or investing in a mutual fund, read up a little on the company, study the competition, look at how demand is projected to change for their goods in the future. Once you know about the company, you can better determine whether or not to invest in it.
- Dollar Cost Averaging
Dollar cost averaging, what is it? In a nutshell, once you decide on a company to invest in, don’t dump all your money in that company at once, instead spread it out into several purchases over the period of a week or so. This mitigates the daily swings of the market and allows for a much more safe way to invest.
- Buy Low, Sell High
While this might seem obvious, most people don’t follow this trend. As warren Buffet quotes, “Be fearful when others are greedy, and be greedy when others are fearful”. This quote perfectly shows when to buy and when to sell, if a stock is doing really well, fell free to sell it! You made a profit! If a stock is doing poorly, don’t sell it off to cut costs, buy more of it!
- Limit orders
Limit orders are dead useful in investing. You can look at a stock and say, “I want to invest in it, but the price is too high right now. I’ll buy it when it drops.”, and that’s what you do. They make it possible to buy and sell stocks at the prices you want, without needing to watch the computer all day or pay someone else to do it for you.
- Stop Loss
Stop loss orders are the opposite of limit orders in a way. Instead of selling when you reach a price you like, you sell when the stock starts plummeting. This prevents you from taking on excessive risk with your investments. For example, if you invest $100, but can only afford to lose $25 you can set a stop loss at $75. When the price drops that far down, you can sell and not incur additional risk. This also keeps your emotions from impeding your investments and keeps you from constantly buying high, and selling low.