Wall Street is known as the battleground of hopes and dreams. Each and every day, there are dreams that come true and dreams that are crushed on Wall Street, and some might tell you that it came down to the education, or lack of education, your advisor had.
Although the “big dogs” in the market will flash their Ivy League Degrees at you, and promise they know best when it comes to wealth management, but do they? The answer is, not always, and the fact of the matter is, you can succeed in the stock market without shelling out large percentages of your profit to pay for an Ivy League Advisor
To help you get the ball rolling on your own towards success, we put together a few of the basic principles that help you get around the fallacy of Ivy League experience on Wall Street.
Set Your Budget
You need to take the time to build and set a budget for your investment portfolio. As you start your portfolio construction, you want to make sure you are investing enough money to build your profits, but not so much that everything you have is stuck in the market.
When it comes to finding the number to start, the answer really comes down to your personal comfort with your finances, and how much you are willing to put into the market from your money. Typically, it’s recommended to start with at least $5000, but $10,000 is even better. Although these numbers are a baseline, most financial advisors will tell you to aim for at least 10-15% of your net income.
Understand Your Risk
Now that we have a baseline amount for how much you should invest, you need to set up and understand your risk factors. This means you have to understand how much you could actually stand to lose before you have to back out of the market.
A helpful way to maintain low risk is by creating a growth threshold for your investment opportunities. If you jump into an investment as it’s gaining steam at +20 points a day, you might want to set a floor that dictates when it’s time to more on. Say your floor is +2 points a day. Once your investment evens out to only +2 a day, you could look to sell or trade at the top before the graph starts to plateau, wave, or simply fall back down. At the end of the day, even if you take risks, try your best to leave with the amount invested at the very least.
Another part of understanding your risk is understanding how bad you will be hurt if the market crashes, which it will eventually. The signs of a market crash aren’t always easy to see, so if the market did flop, would you still be able to afford your bills, house, and transportation? If the answer is no because 10-15% of your income is a major player in keeping the home together, it’s probably not the right time to invest.
Buy Low, Sell High
When you are looking into a new stock opportunity, you want to make sure you can actually gain from the growth. Buying one share of BitCoin now is not nearly as impactful as it was in January of 2017. You might see bits of growth from your purchase, but you won’t see the major gains that the early adopters did. Had you joined the BitCoin buy up in early 2017 or earlier, you would be looking at $9000+ profit return per share, and if you had sold at the top, it could have been upwards of $19,000 per share.
The lesson here is simple. If you can catch the next biggest thing while it’s still a small fry, you can look into making a ton of money as that stock goes up and up. As the stock starts to level out, you will see smaller growth numbers throughout the days, and you might even start to see waves up and down. These are typically the best times to look into your options for selling and trading because you don’t want the stock to start falling before you sell. Trying to sell a falling stock is hard, and holding your cards too long is the best way to make sure you don’t make the money you can off of the gains.
Buy low, sell high.
Overall Market Outlook
The overall market is a great place to look when you are making decisions about joining the market or not. Basically, if the market is up that’s good, but too far up leads to crashes like in 2008.
Often times, the best time to buy into markets is after they crash, but you want to make sure they are stabilizing and going back up before you do. Crashes can lead to businesses closing their doors, and buying into the wrong discount investment option could result in a loss of the investment total in general.
So that brings us to today’s market, and the question, “is now a good time to invest?”
The answer is yes and no. There are some areas that could be ok to invest in, but the overall feeling the market is questionable. The reason being, our current debt as a government is asking for a crash. In the last 8 years, bankers have produced more money than the previous 200 before it. That means massive debt, guaranteed inflation, and an extremely volatile market forecast.
Sure, getting an advisor with an Ivy League Degree sounds like the best way to go for success, but that’s not always true. If you take the time to learn about market signals, invest in stock monitoring software, and take your time, you will be sure to make profit numbers just like the “big dogs” without having to pay them for their services… or degrees.
Have you had a bad experience with “professional investor?” Have you tried to go at investing alone? Have any tips to help the other readers? Share your tips in the comments below.