A good stock market investor knows how to identify good stocks and the same time, he also knows how to manage to buy at a reasonable good time. They basically stand on the sidelines and wait for the right opportunity and then try to grab with both hands whenever the market crashes or undergoes a big correction.
An investor needs to have a basic knowledge of how the stock market works, if he is planning to invest on his or her own. People should have the ability to analyze numbers and filter news of they want to pick stocks by themselves. But if you have the money and don’t know how to pick stocks, you may rather then take help of a mutual fund manager.
There are businessmen and self employed professionals who would prefer to invest their money into their own business which seems to generate maximum returns in their business or practice. However, one should be aware of the fact that it is risky to put human capital and real capital in the same basket.
When an investor burns his finger, he then come to a conclusion that investing is dangerous and then begins to take a firm decision of not returning towards it. However, within a short time, he loses his patience and then opts for other forms of investment.
The most common and traditional form of diversifying one’s portfolio is by diversifying across various asset classes, such as equities, fixed income, real estate, commodities like bullion and crude etc. However, many investors will readily sacrifice this discipline when a particular asset class is faring exceedingly well. As a result, their allocations become distorted.
Many investors want to play safe and avoid exposing their money to market-related risks. But an overly conservative investing strategy also exposes you to a type of risk which finally leaves you without having enough money in the future.