Our economy has experienced some tumultuous times of late. Has the market hit a bottom? Is it time to jump back in and invest in the stock market....?
The stock market has dropped about 37% in the past year. Investment accounts and retirement funds have undoubtedly plummeted as well. It is tough to know what to do in this environment. Experts disagree with each other daily on CNBC. The big mutual fund managers have lost money too. I don't pretend to be any smarter than all the experts. So you can take my advice for what it's worth. But I do believe that I can provide some valuable tips.
Be Cautious This has to be the most important aspect of your investment strategy. Caution. Don't begin investing all your cash in the market at once. It it too difficult to 'call a bottom'. You nor I nor anyone knows when exactly the bottom is. Maybe we already hit a bottom. But maybe not. And that's why you have to be cautious.
Do Your Research You must know everything about the stock or mutual fund you plan to purchase. Read every single news story about it before you buy it. Look at the cash flow statement (available on Yahoo Finance) - make sure the company has sufficient cash to operate in this crazy environment.
Buy Slowly Once you have made your decision to buy a stock, don't buy it all at once. For example, if you plan on buying 100 shares total, buy it in four sets of 25. This way, if it goes down after your first purchase, you can buy some more - on sale. After you've made your decision to buy, be firm with that decision. If it goes down, don't panic. Use it as an opportunity to buy more shares at a better price. These steps are obviously basic, but very essential.
By ehow.com
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