A Short Guide To Investing

By Author: Lecia Selbo
Total Articles: 49
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Even if you''re a savvy saver, you may not be attracted to what stocks and shares have to offer; it''s possible that you consider the stock market as fraught with risk, and tantamount to gambling, so you don''t want to put your money in it.

With cash you get a simple guaranteed interest return, which you can withdraw from easily. With stocks the story is very different, but you need to consider that in the long term the market can be very lucrative. If you''re thinking of the stock market, then here''s a quick guide.

It''s for the long term

Perhaps the most important thing to remember about investing is that it''s for the long term. You can''t expect to make money by making daily trades on a whim ? that''s tantamount to gambling. Instead, with a diverse portfolio, the longer you leave your money in, the better your chances of returning a profit.

Regarding this, an important pattern to consider is: over 1 year cash beats stocks just 50% of the time, over 5 years cash wins 80% of the time, while over 20 years, stocks win by as much as 98% of the time ? it''s a clear indication that market growth almost ...
... always overcome downturns over long periods.

Buy Low Sell High

Buy Low Sell High

Buying low and selling high is generally a strategy of ignoring market behaviour in the short term and looking out for value in a stock. Think of it as when markets fall, stocks are cheaper, so you can buy more; when stocks rise, they are more expensive, so unless you have more money to spend, you will buy less.

Pound Cost Averaging

A typical way to beat market mentality is through a strategy known as pound cost averaging. With this method, you put aside a set amount each month in a fund to buy shares. If you have a diverse portfolio, it means you''ll buy more stocks when prices are low, and less when they are expensive, lowering volatility and risk.

One way to beat the buy high sell low mentality is through a strategy known as pound cost averaging. With this, you pay a set amount into a fund every month. Funds have a fund manager, who will normally pick a wide range of stocks to create a diverse portfolio, which will lower volatility and risk.

Lecia Selbo has had a unit trust with Legal