What Every First Time Investor Needs To Know About His Or Her Finances
So, you finally got some money in your pocket and it is burning a hole? Maybe all your bills are paid up, maybe you just got a raise, or your small business just turned a profit for the first time. Whatever the situation is, you are probably very excited and want to make good investment choices with your profit. Well, you would truly be surprised to learn about all the common mistakes that first time investors make, and this article will prevent you from making those same common mistakes.
Never Jump In Blind
You donâ€™t have to be an expert investor to have heard the phrase â€œbuy low/sell high.â€ However, you do really need to completely understand what the phrase means. It is truly easy for people to draw a different conclusion from this one simple phrase. For instance, what might be considered high to the seller might in fact be considered low to the buyer. This is why it is imperative for you to understand the blue book value, dividend yield, and price/earning ratio before just jumping into an investment. Never just jump right into an investment, because you think it is good. Study up on the blue book value of that stock to see what it is really worth.
Stay Away From Penny Stocks
When you first look at penny stocks they might truly seem like a good investment because you can invest in so many more shares. Unfortunately, the real truth of the matter is that penny stocks are usually made up of poor, undersized companies that arenâ€™t going to turn a profit anytime soon, which means you are going to lose your investment. In addition to this, penny stocks are highly vulnerable to manipulation and illiquidity, so finding out the truth about the value of the companies and their stocks can be quite the challenge.
Investing In A Good Attorney
Personal finances, investments, and the stock market can all be tricky. There are tons of people out there looking to scam you at the drop of a hat. Not to mention, all the bad deals that you could get wrapped up in. With that being said, this is why it is always best to have access to a highly qualified attorney that can advise you and look of legal documents. One example of a great law firm that can do this for you is Joyce E. Smithey, Esq.
Never Go All In
One of the biggest mistakes that most first time investors make with their personal finances is that they end up going all in on one investment. It is important to know that even the most profitable and stable companies out there can have an issue, which will cause their stocks to decline dramatically at the drop of a hat. When you invest your personal finances smartly in a variety of different companies this gives you options. If one stock does bad, it is possible that your losses could be covered by another one of your investments that is doing good.