Percentage in Point

10 Tips For Long Term Investment Success

Posted: 22 Aug 2010 09:36 PM PDT

Sometimes it becomes difficult for the investors to invest money as they are not aware of the principals which are to be followed. If you follow few principals, it will be easy for you to invest money and you will know different ways as to how have a successful investment.

Following are 10 tips for long term investment success.

Sell the losers and let the winners ride:

The investors invest money and expect that hey get more profit out of what they actually invested. They wait for a while in order to see if the stocks have risen. If an investor is not aware of the time when the stocks are of no use and they need to let go them, then the investor may get into a worse situation. In such cases the idea of selling the poor ones and holding it on to the high quality investments become a great theory. But sometimes it may be hard to put in use.

Don’t chase a hot tip:

Before making an investment one should be sure that for what reason they are making an investment. Before investment your money think carefully and research about the company you are investing your large amount in. It does not matter where you get the tip from. One should never take tip from anyone. It’s a law. Investment is all about luck but if you follow few tips that might help you too.

Don’t sweat the small stuff:

When you start with your investment, focus on the big picture. That means ignore the small term issues and think about the long term planning. It’s important that you be confident and don’t over emphasize on the small cents difference that you might gain.

Make sure not to over emphasize on the price-earnings ratio:

Many investors take into consideration only the price-earnings or P/E ratio which is absolutely wrong. Even if you are concentrating on the P/E ratio, make sure not to do so individually. First of all, analyze the complete context of it from within and then combine it with any other procedure.

Do not fall for penny stocks immediately:

When starting with your investment initially, do not have the misconception of investing into penny stocks. This is an absolute wrong thought that penny stocks can get you more profit or are more beneficial. The sensible thinkers and investors would understand it that your profit or less is going to be the same with any stock you buy.

Choose one single strategy and stick to it:

Different strategies are used by different people when buying a stock or investing into stocks. Choosing one strategy and then moving onto another and then switching to another again is just a foolish decision you will make. So, stick to one strategy, if it brings you loss once then the next time it will bring you profit. Switching strategies will not help. Take an example of how Warren Buffet acted in investment during the 90's.

The future should be focused on:

Most of the times we worry and think about the past which is important but not as much as to what lies in the future. Future is what you should focus on and that's more important than the past as it is history. What the bottom line is that you should base all your potential decisions on the future.

Adopt a long-term horizon:

Getting into this risky business, you should make sure that you are not short sighted. Do not fall for short term profits. This is especially recommended to the new investors in the market. This however does not mean that you cannot make profit out of short term investments, of course you can but having the longer perspective will surely make you a profitable must stay in the market.

Open up your mind:

Do not judge a company's stocks by its names. Let me tell you why you should not be doing this but having a broader view and frame of mind. Many good companies have names that are very casual and hence they might not look as very influential ones to you and many weak and small profit making companies have very strong formal names so don't think limitedly but open up your mind and do your complete study.

Keep a concern for taxes but don't fret over them:

Thinking about tax is legal and necessary but this concern should be termed as secondary because your basic and primary concern should be the security of your money and future of your investment. You can ask for a minimum rate of tax and not completely put it off as well but you could set it is such a way that your money and investment stand as your first concern.

All these rules and points might not work for you depending on different situations but long term investors can surely benefit a lot from these.

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