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Tips for successful investing

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Whether you are a beginning investor, or someone who is highly experienced in the world of investing, it can be helpful to go back and review the basics from time to time. This can help to improve the basics on which you may be basing your investing strategy. These helpful reminders can help you take your investing from mediocre to successful. In addition, they can help you stay calm when the market begins to fluctuate, help inspire your confidence and most important help you avoid making mistakes that will cost you money. So if you want to become a better investor, here are some tips for successful investing-

  • Remember that overall growth means nothing-Too many investors focus on the overall growth of the business, they have invested in. This really does not mean anything. What is truly important (as most financial experts are quick to point out), is the growth of the shares. To many times managements of publicly held companies forget this, to the determent of the shareholders. Look closely at the share growth of any investment, and try to overlook the meaningless babble of overall company growth.
  • Keep a margin of safety-If you are walking a fine line between success and financial collapse, when it comes to your investing, you are not being smart about it. If your investments depend on an above average rate of growth, for a long period of time, you have left yourself no margin of safety. This margin of safety is what can protect your investment when the market inevitable downturns. If you are willing to accept this kind of risk, then good for you, however, you should make sure that you are not committing any funds that you will need, in the short term. Money that is needed for buy a home, fund an education, or support your retirement, should never be used for investing, this way.
  • Risk and reward and not always directly connected-While financial experts are constantly touting the adage of more risk, more reward, it is important to realize that there are always exceptions to the rule. Savvy investors keep their eyes open for opportunities that could be the next big thing. For investors who are willing to be open to the possibilities, there are sometimes investing opportunities that present low risk and huge reward.
  • Invest in what you know-The bottom line is that if you can't understand an investment, its best to pass it on by. Too many investors make the mistake of letting their pride drive their investing decisions. If you find that you can't understand an overwhelming prospectus then it may not be the right investment for you. The most successful investors put their money in what they know. Don't let the fear of losing the next big thing or feeling left out, let you make a bad investing decision.
  • Stay away from any management that does not hold the highest standards of ethical and professional behavior-The bottom line is that not matter how good an investment looks, it is never advisable to go into business with people who are dishonest. Investors should make sure that anyone who is not operating with the highest standards of honesty and ethics and is rooted out, before committing any money. If this is not possible, then it is simply advisable to move onto another investment.
  • Don't check the market everyday-The market will go up and down, and sometimes this will happen on a daily basis. Checking your investments daily only leads to frustration, panic and making wrong decisions. Studies have shown that those investors who allow themselves to make decisions based on market fluctuations, do much more poorly, then those investors, who wait the market out.

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