The greatest fear of investing in the stock market is a failure. You just can’t imagine getting loses when your investment returns turn out lower than what the average investor should get. Secrets to winning the stock market are the key elements that you should never ignore.
To win the stock market, you should aim at meeting your long-term goals and avoid making fundamental mistakes. As an investor, you need to win educationally, by learning financial skills, markets and economics to help you manage your funds well.
5 Secrets to winning the stock market game
Most amateurs use the trick of diversification to win the stock market game. You will have to mix different investments which have different reactions in the stock market and the economy. You need to understand that stocks and bonds might fall and rise in a variety of ways.
Note that companies have different reactions into a business cycle. Some stocks like those of utility companies do well when the economy is performing poorly with falling interest rates. Retailer stocks do well when the economy is healthy while people buy a lot of things.
2. Keep your investing fees low
According to Fidelity reports, an average investor can make 77 trades per annum. This means that it could cost an upward of $770 in fees per annum on cheap discount brokers.
If you want good results, invest in companies which have products people love buying but don’t sell your stocks. Avoid bad investing habits because you might lose money.
3. Don't use margin
Margin is a loan you get from your broker to buy stocks that you can afford. You will then pay it on interest, but it can increase your returns as you make the payments. In case the stock fails, you might as well experience massive losses.
If you lose 10% on your portfolio of $5000 you will be down by $500. It is tempting to invest on margin, but it is better than looking for the next hot stock.
4. Get the easy points in the stock market
Did you know that the tax savings from retirement accounts are free money that you can make from the stock exchange? As much as it may suck to have your money locked somewhere until age 59 and a half, it helps you maximize your IRA contributions.
You can get 50% return if your company gets to match 0.50% for each dollar you invest in your IRA.
5. Identify a great company and buy a great piece
Another secret to winning the stock market is to determine a great company and buy from them a piece that will bring growth. These two parts are some of the essential secrets you need. Avoid short cuts as many investors get tempted with shortcuts.
A Final Word
Stock market investment is better than savings accounts because you might get a lot out of it compared to savings. Secrets to winning the stock market involve regularly depositing to your budget and patiently watch your investment grow.