One of the tricky things about taking investing advice is that the stock market is always new to some extent. A given piece of advice might apply one year and not the next or your own circumstances as an investor may also change and shift your priorities with regard to your portfolio. There are all kinds of variables at play.
However, there are also some more general types of investing advice that essentially never change—based on market circumstances or personal ones. Here are a few such tips to keep in mind as you go about managing your finances.
1. Eliminate Your Emotions
It’s not uncommon to hear or read that emotional reactions can be detrimental to your trading efforts. In fact, pretty much every expert you can find agrees on this! The Wall Street Journal did a terrific write-up where it pulled quotes from various successful investors and analysts, ultimately getting at the point that investors can be undone by the emotional ups and downs that come with trading. People get excited when they make gains and stay with a stock too long. They get stubborn upon losses and hang on when they shouldn’t. They may even get jealous of others’ gains and make reckless decisions. There are all kinds of emotional reactions you can have in the stock market, and almost all of them take you away from the calm, logical reasoning that is required for sound trading.
2. Always Have An Exit Strategy
Though it was specifically discussing strategies with regard to forex trading, an article at FXCM made a very important point about getting out of investments at the right time. As they put it, traders frequently neglect to set up exit strategies! This approach can be tempting, but it’s also financially irresponsible. You should always have an exit strategy, and more often than not that means setting a stop-loss limit, which is a low number at which you’ll withdraw your investment even if it means accepting a loss. By doing so you can avoid a potentially bigger loss.
3. Consider Low-Cost Platforms
There are more ways to invest in the stock market than many people realize. For that reason it’s worthwhile to sift through them and find some that come with low costs. U.S. News covered this in an article about different investment tips that can boost your portfolio and recommended people seek out low-cost mutual funds and bonds. These are generally low-effort methods of investment with small fees. However, the point here isn’t to look for something specific, because different people have different priorities. The advice that’s always helpful, though, is to spend some time looking for low-fee possibilities.
4. Treat Specific Advice With Skepticism
Finally, remember to treat tips and pieces of analysis from experts, TV personalities and the like with a grain of salt. This is a point that was made by The Atlantic in a piece that suggested people need advice for real financial issues, rather than picks of which stocks to buy or where the market is going in a given year. In other words, try to gain education about broad, general ideas rather than day-to-day specifics. This boils down to the old saying that if you give a man a fish you feed him for a day, and if you teach him to fish you feed him for a lifetime. Going for specific tips on stocks is not necessarily helpful but learning about trends, patterns, and methods is.