How not to joke with money, or bad advice to an investor

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1.Invest all your money in stocks, you can even borrow for such a thing.

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Before investing in stocks, set aside money for living and unexpected expenses: create an airbag, open a bank deposit, or buy low-risk bonds. Remember that investments are always risky and you can not only earn a lot, but also lose everything. Invest the amount that you are internally ready to lose – alas, this is possible. Do not borrow money for investments either from the bank or from friends – you can never invest the last money. Before rushing into battle, study the theoretical part.

2.Don’t Waste Your Time Managing Your Investment Portfolio: Hire a Professional and Forget

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There is an opinion that if you decide to trade on the stock exchange, but are not ready to spend your strength and nerves, then you can simply trust the professionals and forget about everything in the world. But the trustee also needs to be given attention, at least at the beginning of your relationship. He should be aware of your vital needs and plans in order to select the optimal scheme of behavior for you in the financial market. And who said that all trustees are professionals in their field and decent people? The “trust but verify” principle applies here as well. But to check how trust management is carried out, you need knowledge that, alas, no one will acquire for you. So you still have to spend time.

3.When investing, forget about the peculiarities of your character and temperament

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When determining the tools you will use, match them to your personality. Brokers joke: “Buy bonds – sleep well, buy stocks – eat well.” There is some truth in this – sometimes stocks make an investor nervous. If you are too emotional, seriously worried about losses, then trading with leverage (that is, with a loan provided by the broker) and investing in stocks is not for you: there is a risk of making wrong decisions in a panic and exacerbating financial losses. Yes, stress is bad for your health. Only invest in risky instruments if you are comfortable with losses and can act coolly.

4.Make as many trades as possible

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Frequent transactions in the securities market can lead to a loss of your strength, energy and even money. And do not forget about the broker’s commission, which will also have to be paid from each transaction. Speculative strategies do not always bring more income; in most cases, a passive investor earns more. Although there is a joke that a long-term investor is an unsuccessful speculator. Choosing the best strategy for you depends on many factors, including what knowledge and skills you have, so take this decision very carefully.

5.Don’t stop, bounce back in a falling market

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This advice is illustrated by the saying “The father beat his son not because he played, but because he fought back.” If the market is not moving in your direction, it is better to stop, exhale and take a breather. In this case, to complete the auction (execute a stop loss) means not to give up slack, but to avoid even greater losses. And you always need to clearly know how much you are willing to risk and what rules for closing a position are agreed between you and your broker. It is not uncommon for a client, with the help of “leverage” – a loan provided by a broker – to lose everything in excitement and still owe exorbitant amounts. Do you need it?

6.Use insider information

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Insider information gives the owner a non-market advantage, which is why its use in financial market operations is punishable by law. Are you ready to serve four years in places not so remote and lose your business reputation forever? In my opinion, the answer is obvious.

7.It is better to “increase” than “save”

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“Save” and “multiply” are two different investment strategies. They involve not only different goals, but also different tools, knowledge and skills, investment horizon, level of risk taken. With regard to the financial airbag, which may be needed at any time, the “save” strategy is the most adequate. This strategy requires a minimum of knowledge and effort, but allows you to overtake inflation, that is, maintain the purchasing power of your savings. The “multiply” strategy is adequate for money that you do not plan to spend in the foreseeable future. By investing, you can multiply your funds many times over, but you can also get a negative result. Do not go to a fortuneteller here – you will need additional knowledge so that the result will meet your expectations.

8.Trust the advice of professionals

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The best strategy is to have a rational-skeptical mindset. In the financial market, especially when it comes to investments rather than savings, it is better to double-check the advice of a banker or a broker. Perhaps, giving you advice, they are pursuing their own goals, and not your goals at all. Be especially vigilant when it comes to free advice.

9.Count on a stable financial market

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No one predicted the collapse of the USSR in 1991 or the mortgage crisis in the US in 2008. But these events happened and had a strong impact on the financial market. You cannot be sure that there will be stability forever and nothing will happen – anything can happen, and much faster than you would like. Remember that investments are always a risk, and risks must be dealt with in real time.

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