Markets will pay off ultimately if you keep investing little by little and come out a winner in the long run from any volatile situation or financial turmoil.
Everyone seeking monetary freedom will be tested continuously amid several upheavals in financial assets worldwide, as we often see with wars, inflation, etc. Wherever market forces are involved, or when multiple players jostle to outbid each other, there is bound to be chaos, mispricing, and, yes, even a sea of red.
Some people think it is easy to invest in any financial asset and make boatloads of money, but quite often, it is easier said than done. Investing in any financial asset requires knowledge, good planning, and careful execution. Then, you too can get financial freedom. But no matter where you stand in your wealth creation, avoid these mistakes to create a proper investment strategy that will result in maximum gains with minimum losses.
Pay less attention to the voices in your head about how bad the market value of your portfolio has deteriorated. As we all know, and as discussed above, markets are not meant to be static; hence fluctuations are normal. So, come to terms with your losses. Don’t over-obsess them because that could lead you to make more losses. If you have invested in a financial asset with a sound strategy in place that considers all financial conditions, whether good or bad, then stick to that game plan.
Remember, a good business or investment always bounces back.
Risk is not just a four-letter word. Like a lot of things in life, there is risk involved in financial assets. Your basic goal with any investment is to minimise your risk. One way to do that is to assess the right price for any asset. If you have overpaid, then make sure that you reinvest in the asset when prices are low. Investing is all about managing risks. If you have little capital, don’t be reckless and invest in stocks. Ensure that you protect your capital with fixed investments, and then go for riskier assets.
Keep in mind that markets will not easily give you your profits. It is definitely possible for the markets to hit a low point and get you to the point of frustration, almost coercing you to sell your assets cheap. However, unless you are in financial turmoil or the markets have closed down, there is no reason to panic. At best, if the financial conditions are not obliging, make patience a virtue. Get into the habit of avoiding pressing the panic button. Remember, markets have recovered from every crash there has ever been. On the flip side, milk your assets for all it is worth. Double up on your investments if you find them too cheap.
Ever since Covid-19 hit, many new investors have entered the market, hoping to make a quick buck. However, base your investments on a strong foundation of solid, high-quality investments for the long run. Actively trading in your portfolio could prove profitable in the short-run if you prove lucky; however, consistently making money through getting in and out of stocks can prove to be a fool’s paradise. You will only make money if you keep the focus on the long horizon, trade less, and invest more and continuously when prices are low.
One last point is that no fortune has ever been made in a day. Even great businesses need time to scale up and grow in size and scale. So one needs to keep going consistently and slowly with one’s investments and keep driving on the path to financial freedom, and that requires only one trait: consistency. Markets will pay off in the long run if you keep socking away; little by little, you will be able to come out trumps in the long run from any volatile situation or financial turmoil.