With so many different products on the market, how do you know how to pick the best investments for your individual goals?
Each of us has one main goal in mind and that’s to make as much money as we can in the shortest amount of time. Wouldn’t it be nice if you could double the value of your investment portfolio in a matter of a days? The fact is that while a goal like that is largely impractical, people have that very goal in mind and they invest looking for fast gains without any work.
Picking the best investments is actually not so much about answering the bonds versus stocks versus mutual funds versus whatever else question. It is about picking something and committing yourself to learning everything you can about it and putting a sizable amount of time in to it.
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The unfortunate truth is that statistics show that the part time investor loses money in the stock market. You can read article after article about the secret 10 minute way to become a market expert but if it were that easy, wouldn’t all of us quit our jobs and trade stocks all day?
Jim Cramer, best selling author who runs Action Alerts Plus which allows you, me, and every other part time investor to trade along side of him, says that for every stock that you own, at least one hour of research must be done per week.
You may have heard that diversifying is the key to making the best investment choices. That is absolutely true and it’s the one rule that cannot be broken. You must own stocks in different areas if stocks are what you choose. Jim Cramer say that a minimum of 5 stocks is needed to be truly diversified so that’s 5 hours of homework per week.
Making the best investments that will cause your portfolio to grow actually twofold. First, education. If you have that 5 hours per week plus a little more, you will quickly learn what you need to know.
The second one is patience. The best investors make money over time. Every investor knows the name Warren Buffet who invests with the idea of making money on his investment years if not decades later. Very few people know of the day traders. The people consistently making money in short term trading are the multi million dollar hedge fund and mutual fund managers. Not average people like you and I.
If you don’t have the time or don’t feel confident that you can make the best investment choices, consider subscribing to a service like Action Alerts Plus where an expert is doing your research for you and all you have to do is buy and sell when they tell you to execute the trade. My secret is that I don’t have enough time to do all of my research so I let Action Alert Plus do it for me.
Remember that the goal is to make money and regardless of what method you use, the money you make by allowing somebody else to do the research will work the same as if you did it all yourself.
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The first book I ever read about investing was Jim Cramer’s Real Money. Click here to go to the elementary finance bookstore to order your copy. You can also take a look at the book in the box above. Although the first book, it is still the book I reread once every year.