In this guide, we explore investing for beginners. Then, we will give you a few valuable tips that can help you become a better investor. Although private investors sometimes make mistakes, it is important to learn from them and avoid making them yourself.
Guide: Investing for beginners19 Jul 21
The fact that an investment has proven to be profitable in the past does not mean it will continue to be profitable in the future. It is pointless to look at the past and project this onto the future. Although it is important to consider the past, you should never base an investment on it. There is an exception to this notion, though. Because diamond prices have a stable development, investing in diamonds is highly profitable. When you invest in diamonds, you have the added advantage of holding the diamonds in your hands, whereas the value of your shares, for example, is represented by a mere piece of paper or a virtual promise.
High vs. Low risk
High profitability usually means a higher risk. So do not be tempted by a quick financial gain. If a certain share has a volatility of 30%, it means the price could both go up or down.
Think long-term investment
Long-term investments are better than short-term investments. Active investors make a large number of transactions and try to buy and sell at the appropriate time. To invest passively means to get good long-term profitability and to disregard short-term fluctuations. When investing as a beginner, do not go into trading right away. For many people, this seems challenging and exciting, but there is a good chance you will lose money. Even most professional traders have a hard time trying to beat the market. We often hear announcements about people making great profits, but everyone is much less keen when talking about their losses, which occurs just as often.
You can win half the battle by starting young. Investing at a young age is very important. The longer the investment horizon, the higher your profit will be. Young investors can afford to take bigger risks. There is a connection between your investment horizon and the number of risks you can take.
Make wise decisions
Emotions and investments do not mix well together. Do not let your emotions cloud your judgment, and never make decisions based on emotions. A lot of investors make the mistake of keeping a company they like for personal reasons in their portfolio for too long, even if it is going in a negative direction.
Take the loss
As a beginner investor, do not be afraid to take a loss. A lot of investors want to get good profitability on every position and sell at a higher price than they originally paid. However, it does not work like that. Shares that do not make a high enough profit are kept in the portfolio for too long this way because it can take a long time to achieve the desired result. Do not be afraid to sell your shares if prospects are not good, even if this would mean you make a loss or do not make enough profit. Replace your shares or securities with diamonds, for example, which will yield a higher and more stable profit. The long-term goal is to keep the most profitable positions only and replace the less profitable ones with alternatives.
Investing for beginners can seem daunting at first. At BNT Diamonds, we are happy to advise you objectively on this matter.