ResearchThis is one of the most important elements to successful trading. No-one has ever invested and trebled their return without having researched the sector and company they plan on investing in.
In your chosen sector lookout for reports and figures that show market trends, The Office for National Statistics is a great place to start.
Take a close look at the prospective company you’ve chosen and any major shifts in stock prices. If there has been any huge changes find out why.
Track the MarketThis follows nicely onto tracking the market. Even if the stocks you have are doing well, track the market as a whole; this is going to help build an understanding of why your stocks are improving and other companies are dropping in value.
There are an unlimited number of factors that can impact the value of company, from politics or new acquisitions to changes within legislation in the industry.
Understanding the CostsThere are a few costs associated with investing, particularly if you plan on investing directly into stocks and shares. Research any costs within the market you plan to invest in and find out if these costs can be reduced.
Going through a wealth management company can help beat these costs as many will charge a set fee.
A wealth management company can also offer structured products, giving your investment exposure to a number of industries; potentially increasing the chance of a return.
What About a Fund?Funds are a great first step into investment, especially funds that track full stockmarkets. For example, a FTSE fund will follow the FTSE score as a whole and give an insight into the market, after a year or so you’ll have a feel for the market and a sector that is of more interest to you and a your expanding portfolio.
Take Your TimeRemember that investments are long term money making projects, there isn’t necessarily going to be a huge return within the week. If an investment drops avoid pulling the plug on it immediately as it could end up costing more in the long run.
Only invest the amount of money you feel confident investing, as any potential loss could end up reverberating through finances elsewhere if too much money is committed.
- Keith Hodges is a personal finance journalist writing news, features and advice guides for CashCompass.co.uk