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Tips to become a smart investor

Tips to become a smart investor

In today’s uncertain times it only makes sense to save for the future.

One of the best ways to save is to invest in certain schemes that will help you achieve your life goals and build a substantial amount of wealth over time. However, you can’t simply invest in any scheme that comes your way. You will have to be smart and invest in a sustainable and have a rewarding portfolio.

In general, most people save for events such as:

  • Marriage

  • Property

  • Child education

  • Child marriage

  • Retirement

In this post, we share a few tips that apply to all types of investing and investors. These parameters will help you to become a smart investor.

1. Have a control over your emotions

Most people invest based on their feelings. This is not the right way to select a fund. You must select funds after sound research that is backed by proper facts and numbers. Once you have selected the funds you will have to avoid reacting emotionally to every movement that occurs in your stock’s performance.

the market is volatile and there may be times when a good performer stock can hit the bottom and an underperformer can shine brightly. Remember that this is just a cycle and the scenario will change. You must put in efforts to use the current cycle to your advantage instead of being emotional.

2. Avoid temptations

The market is full of opportunities and there may be some tempting investing offers on your way. Be aware of false investment promises and avoid getting lured by easy returns schemes.

fund companies that have been consistent especially in paying out dividends rather than those companies that have a spiky trend.

3. Analyze your financial condition before investing

Avoid pushing your money into investments if you are not financially stable. Many investors and traders have suffered a lot as they had to borrow money in order to invest in the stock market. Many investors have even lost the money invested in such a manner.

It is important that you first analyze your financial situation and then invest in a company accordingly. Also, avoid investing in companies that require a regular and large amount of investment to generate returns.

4. Know your Free Cash Flow (FCF)

FCF refers to the savings you are left with after deducting the capital expenditures. You can use FCF as a parameter to judge a business for investment purposes.FCF lets you know if it is worth investing in a company or not in an easy way. The more free cash flow a company holds, the more it can offer for reinvestment purpose and dividend pay-outs.

5. Be patient

You must understand that you will not be able to amass a huge amount of wealth overnight. Investment is a gradual process and it will take time to see the wealth accumulating.

maybe times when you may consider selling off your stocks or buying them without any second thought. You must avoid such a foolish act.

The market works in cycles and what are a bear today may become a bull tomorrow and vice versa. You will have to be patient enough to see the results. Make sure that you do not hurt your capital strength in the long-term when making any investment decision.

Investing in the right funds can be tricky especially if you are a beginner. Also, it is easy to fall prey to easy investment schemes and false financial promises. As the saying goes, prevention is better than cure, you may consult an expert financial advisor before choosing your portfolio.


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