What you should know to become a prosperous investor


No one should underestimate the role of investments in our modern and growing economy. Without any doubts, all types of investments demand excellent understanding of all the risks, opportunities and economy tools. Even if you have several decades of experience, you can, be sometimes wrong and make mistakes while investing. In this article we’ll analyze and speak about the things investors need to focus on. The whole situation concerning investments is a very controversial one. Sometimes, it’s better for investors to look through a broader lens and focus on the larger picture. So, what issues should to be focused on? Here they are:

  • There will always be some losing stocks
  • Never predict the next hot trend
  • Quarterly reports are not that important
  • Do not go to cash

It’s always necessary to pay attention to a portfolio approach. What does this mean? Let’s examine! 5i Research will provide you with a model portfolio the investors should follow. It also has a specific portfolio focused on growth. This portfolio is almost up 26% this year. Along with this it has some lower stocks. There are even some stocks decline of which reached almost 50% or even more. As a rule, most of the investors pay too much attention to these. However, the main thing that really matters is the total return in your portfolio. Even few successfully invested stocks can completely swamp all the losses on the losers. For example, a stock up 1.000% is able to make up for many mistakes. If you’ll think only about the mistakes it’ll distract you from taking a portfolio approach we’ve mentioned above. And vice versa complete absence of losing positions will bring you just mediocre returns. It’s a well-known fact that risk is a vital part of any investment.

Interest rates decline. It seems that all investors are loading up on gold stocks. There’s no any necessity to predict which of the sectors are going to enter the game next. Try to own most sectors, to reduce portfolio volatility, and finally pay less in taxes.

Most of us are interested whether this or that company beat or missed expectations. Investors often react to the latest changes and news. However, it’s always better to focus on longer trends not at their part.

Nowadays, the inverted yield curve and the looming recession bother almost everyone. Investors are interested whether going to cash will be profitable and will protect their portfolio. In real situation, it’s impossible to predict the future especially speaking about world economy. At the same time, this is not the thing that matters. Changing economy never lie.

All recessions, come and go as well as other periods. When you are going to cash you miss rather big gains. Of course, you can also miss some rather big short-term losses, but what will you do with cash? Will re-spend cash with perfect timing? (Highly doubtful.) Will you make so bold as to buy at the market that plunges? (History gas no such examples) Remember that every stock you’ve bought and then made money in it was sold to you. And the person who sold you every stock had no any thoughts about future market decline. So, nobody who buys stocks from you will ever think about future consequences for you. That is the truth.