The Best Way To Keep From Making Idiotic Investing Errors

Intelligent individuals often make silly mistakes with regards to investing. Part of the reason for this, I guess, is the fact that most people do not have the time to learn what they need to know to make excellent decisions.

Don't Forget to Diversify

The standard stock market return is 10 percent or so, but to earn 10 percent you need to own a broad range of stocks. In other words, you must diversify.

To make money on the stock market, you'll need around 15 to 20 stocks in a number of industries. (I didn't just make up these figures; the 15 to 20 range comes from a statistical calculation that many upper-division and graduate finance textbooks explain.)

Be Patient

It's important for investors to have patience. There are going to be many bad years. Many times, one bad year is followed by another bad year. But with time, the great years outnumber the bad.

They compensate for the awful years too. Patient investors who stay in the market in both the good and bad years practically always do better than people who try to follow every single fad or buy last year's hot stock.

Invest Regularly

You might already know about dollar-average investing. Rather than purchasing a set number of stocks at regular intervals, you buy a regular dollar amount, such as $100. When the share price is $10, you purchase ten shares. If the share price is $20, you acquire five shares. If the share price is $5, you purchase twenty shares.

To make dollar-average investments work with individual stocks, you need to dollar-average every single stock. In other words, if you're purchasing stock in IBM, you have to purchase a set dollar amount of IBM stock each month, every quarter, or whatever.

Don't Ignore Investment Expenses

Investment expenses can add up rather quickly. Small differences in expense ratios, costly investment newsletter subscriptions, internet financial services (including Quicken Quotes!), and income taxes can quickly subtract tens of thousands of dollars from your net worth over an entire lifetime of investing.

Investment expenses can add up to really big numbers when you understand that you could have invested the funds and earned interest and dividends for years.

Don't Get Greedy

People today make all sorts of foolish investment decisions when they get greedy and pursue returns that are out of line using the average annual returns of the stock market.

If a person tells you that he has a sure-thing investment or investment technique that pays, say, 15 percent, don't believe it. And, for Pete's sake, do not buy investments on a shell company or investment advice from that individual.

Don't Get Fancy

For many years now, I've made the better part of my living by analyzing complex investments. Nevertheless, I believe that it makes most sense for investors to stick with basic investments: mutual funds, individual shares, government and corporate bonds, and so on.

To add to these basic investments, ask an investment professional about merge companies and financial mergers.

4 Strategies To Build An Excellent Portfolio
Walking through the financial maze of stocks, bonds and mutual funds can be quite a task. American Century Investments offers the following tips to give you the know-how on building a profitable portfolio.

Make Sure Your Financial Situation Is In Good Shape Before You Start Investing
Before you consider investing in any type of market, you should really take a long hard look at your current situation. Investing in the future is a good thing, but clearing up bad (or potentially bad) situations in the present is more important.

Approaches To Help You Get Rich In 2011 And The Future
Let's admit it right off; we all want to get rich. It is the dream of anyone who gets on the train to work every day of week and of everyone who counts their coins at the end of the month.

Forex Trading Is A Pragmatic And Also Extremely Rewarding Investment Alternative
Forex currency trading is a convenient and profitable investment option that has boomed tremendously during the last decade. Currency trading can even be done online but it requires a lot of understanding and knowledge, for this forex signals from forex experts can make trading easier by providing analysis and recommendations.

The Holy Grail Of Capital Markets: Use Investment Strategies That Will Never Ever Fail
A number of people believe in it, others don't and many have maintained that such a technique or system doesn't exist or is simply impossible.

Is It A Brilliant Option To Invest In Covered Calls?
If you are a keen investor you may have already heard something about covered calls. This financial strategy is growing in popularity and has been getting some fantastic reviews from people who have made lots of money from it.

Will An Investor Earn An Income With Investing In Gold And Silver Coins?
Many investors are always chasing "the next big thing". The difficulty in investing lies in the volatility of so many markets.