New Investors - Strategies and Pitfalls

Many successful people have become that way because of investments they made earlier on in their lives. Nevertheless, getting into active investing for the first time can get overwhelming due to the amount of information on investments currently available.
Investments can also sour, with recent notable examples being the bubble and the dramatic drop in real estate prices after the sub-prime mortgage crisis.

Keeping that possibility in mind, a new investor would usually benefit from watching for interesting developing technologies, growing industries and new inventions as an excellent starting point.

The Stock Market - The Traditional Way People Invest

How does a new investor take advantage of knowledge of a new technology or the next big thing that will sell like hot cakes? People have traditionally invested in the stock market, primarily because investments in stocks have a long history of outperforming many other types of investments over a period of time.

A large segment of the population now uses stock market investments to maximize the return on their money and to protect their assets from inflation.
In addition, some stocks pay out dividends on a quarterly basis, thereby giving investors an additional return on their investment while they hold the stock for capital appreciation.

Commodities and currencies can make excellent speculative trading vehicles. Nevertheless, buying and holding a well selected portfolio of stocks has managed to perform better than most other investments over time.

Stocks and Diversification

One of the main pitfalls that a new investor should avoid consists of
By Jay Hawk
Jay Hawk
Jay Hawk enjoyed a 12-year professional financial markets career incorporating extensive first hand futures and options experience obtained by trading in the stock, commodity and forex markets on U.S. exchanges. Since retiring as a full-time financial market professional, he has been actively trading stock, commodities, forex and options for his own account and managing funds for others, as well as writing financial market commentary and educational articles.

Copyrighted 2016. Content published with author's permission.

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