When you’re new to investing the amount of information you need to process can seem overwhelming. There are dozens of different strategies from hundreds if not thousands of self-proclaimed gurus fighting for your attention. How do you choose which strategy is right for you?
First, decide on your time frame. Investors planning for retirement will follow a different strategy than those looking for short term profits and neither of these types of investors will want to use the strategies espoused by ultra short term day traders. Time frame determines the types of investments that are most appropriate which, in turn, affects the types of strategies that are germane.
Next, determine your capacity to take a loss. If you’re sixty years old and investing your retirement savings you’re not going to want to invest in securities that can potentially lose a lot of value within the time period after which you’ll need to withdraw that money to meet living expenses. If you’re twenty then you can afford to absorb a lot more losses while refining your investing strategy because you have so much more time to recover from any poor decisions you make. No matter your age you need to take an honest look at the funds you have available to invest and when you’ll potentially need that money and use these criteria to determine your ability to assume this type of risk.
Finally, with the above two factors in mind, simply take a look at the most popular strategies in the marketplace of ideas and pick one that makes the most sense to you. You’re not deciding which strategy you’ll use for your entire investing career you’re just identifying a good place to start. After all, successful investing isn’t about finding a guru and following their advice to the letter (which is a sure losing strategy) but about finding a set of rules you can use to get started then refining those rules as you gain more experience investing.
In summary, developing a successful investing strategy is less about intense analysis of the pros and cons of each competing point of view espoused by the various “experts” in the field and more about determining your time frame and risk then picking an existing strategy to start with. Remember, where you start your investing career is much less important than how much you learn and how you apply that experience as you move forward.
Marc is a prolific author and marketing consultant that writes on a wide variety of topics for a wide variety of online and offline businesses. Take a look at his latest website at http://www.phoenixtaxattorney.org/ if you’re looking for a Phoenix tax attorney.