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Share Tips |
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If you want to build up your wealth or want to make a
living out of share investments both are possible but
the strategies and the risks involved would be quite
different. It is much more easier to increase your
wealth with good share investment strategies over a
period of time then it is to get a regular income out
it. In building wealth over a period of time the tax man
also lends you a hand by giving you a whooping 50% tax
benefit on your capital gains tax in some countries
(egs. Australia) if you hold the investment for
more then one year. If you are just starting out you
should spend some time learning about the different
share investment strategies and understanding what are
the various terms and tools available to help you out.
Never invest by just getting a tip from a friend or on
the basis of an email from some unknown shares guru. Do
your own research before putting your hard earned money on an
upcoming stock.
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Some good share investment tips
- Read books,
scan the internet, gain knowledge and become a
learned share investor.
- You should understand and know the basic terms
and tools like P/E ratio, dividends, EPS, DPS,
dividend reinvestment plans, book value, franking,
short selling, stop loss, basic and advanced
charting techniques.
- Use a broker that provides internet share
trading and compare the the facilities available on
the website with other broker websites. If you are
not after advice from the broker then the internet
broker will prove to be much more economical over a
period of time.
www.comsec.com.au and
www.etrade.com.au
are good internet brokerage sites for the Australian
share investor.
- Remember the fundamentals of a stock are
very important and always try to buy low and sell
high. Stop losses should be an integral part of your
share trading. Remember the golden rule "cut your
losses short and let your profits run".
- Never put all your money in just one share investment.
Remember the old saying "Never keep all your eggs in
the same basket". Diversification is very important
to keep your money safe and growing.
- It is inevitable that your share investments will not
just keep growing, there will be periods when they
start to decrease in value. The share market will
have its periods of gloom, but
if you invest in quality then you can be sure that
your share investments will grow over time. On an average
the share market has
always outdone a simple saving strategy.
- Borrowing to invest can be a very good strategy
for the young and who can invest wisely with some
good advice. This strategy is known as leveraging
and can become a very good tool to become rich fast,
but if done badly it can also make you loose your
capital at a much faster rate.
- Your investment should contain components of
both risky and safe share investments. Remember your
risk component should be larger when you are young
and should decrease with age. It is easier to
recover your losses later if time is on your side
and the gains are also always proportional to the
amount of the risk in the investment. But the risk
should always be a calculated risk.
- Never sell when you feel the stock has reached its bottom. This way you will
loose money and also loose a chance of any recovery.
Remember that history tells us that the stock market has always bounced
back.
- Be patient and always invest with a long term
view of the market. The market is known to transfer
the money from the impatient to the patient.
- You will make mistakes. Learn from your
mistakes. Remember everyone makes mistakes.
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