6 Must To Do's For Every Investor

By: Ejaz Alam | Topic: Investing

The objective of every investor is to make profits. Seasoned investors are aware of the fact that investments may cause them a loss as well, that is to say ‘where there is profit there is a loss’.

Consider the following points before making any investment:

1. Educate Yourself

Whatever your financial health is, study and learn everything about that particular investment instrument.. Whether it is real estate, metals, currencies, stocks or government securities, put yourself wise about the instrument. The more you know the better will be your confidence level.

2. Recognize The Right Opportunity

This can also be termed as your ‘entry’ point. There are number of investment opportunities around you. However you can only benefit from them if you enter into them at the right time. You have to recognize the right opportunity that suits you.

For this you need to be highly knowledgeable, creative thinker and quick decision maker in order to profit from the opportunity that comes in your way.

3. Be Prepared For The Worst

Some wise man rightly said,

‘hope for the best but be prepared for the worst’.

You need not to be completely pessimist or an optimist about any circumstances. Optimists often fail because they don’t at all consider the dark side. Whereas pessimist sees so many problems that he gets reluctant o invest and therefore makes no profit.

You have to create a balance between the two. This problem can be negotiated by wise thinking. Consider and enlist all the possible mishaps which you may encounter in your way. Now write all possible solutions to each. This way you will not get caught of guard.

4. Plan Your Risk Management Strategy

Before making an investment decision check out your tolerance level. If you are investing one million and your risk tolerance is 200,000 bucks then try to protect the other 800,000.

Remember every investment instrument carries certain degree of risks, It may vary from instrument and type. Select only that investment type that you think matches your risk tolerance.

5. Plan Exit Strategy On Wrong Decision

You researched hard about a certain investment type but then things have started going against you. Don’t panic at all. Remember the most experienced investors also make wrong assessments. To cope up you must chalk out an ‘exit strategy’ in your investment plan. This way you will know before hand about your course of action when the tide starts rising against you.

6. Booking Profit At The Right Time

Every thing went well and your investment targets are achieved, what to do now ? It is quite possible that rise in your profits may trigger your ‘greed’ instinct. And you start thinking that if I continue my investment then profits can increase further. Shall I stay in for some more time or…?

Well its all up to you, if you feel confident you may wait for some more time. However at the same time reduce your risk tolerance limit. At this stage wise decision can be ‘Book Profit Immediately’. Markets and investment opportunities will always be there for you tomorrow.


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