Thursday, February 14, 2008

Getting started in stock markets

1.)Try to understand why you want to invest. This is the hardest thing - looking at yourself objectively. Search for an area where you hold some strength. It is tough to make money in the markets at the best of times, so don't disadvantage yourself by investing in things that you don't understand. You'll have areas of expertise that fund managers don't. Use that advantage if you can. Warren Buffett describes this as his 'circle of competence'.
2.)Do loads of research. There's more valuable information available online than we can imagine.
3.)Learn to think independently. This is the biggest skill you can learn towards becoming a successful investor.
4.)Don't forget about dividends. Studies show that dividends make up most of an investors return over the long term. Find a way to reinvest those dividends for improved returns.
5.)Look for investments, not gambles. Learn to understand the difference.
6.)Consider a long-term perspective on your investment portfolio. These tend to earn more but over a long period of time.

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