10 Strategic Steps to Do-it-Yourself Investing
Your Investment...Your Responsibility
Ah, you've heard your friend investing on her own talking about her gains so now you're interested.
You have read of people claiming they have gained millions of dollars investing in the stock market. Or, articles that say put in $200 and gain a million. Some of these are true, but remember, these are rare occurrences.
Still, many dream that it could happen to them, too. If you're a dreamer, buy a lottery ticket or go to the ponies. Your chances are better! If you're ready to do just a little work... read on.
There is more out there than just stocks in investment, and just a little effort is really worthwhile. Investment is about your retirement, your family's welfare, your children's education, your health and everything important to you. In short, it is your life. Swallow the fear. Take back the responsibility. Empty the mattress or pillowcase and let's look at what we learned in the last year, and what makes sense now. Where to start?
1. Make yourself investment literate
First step in the commitment is to learn. Set aside an hour of your day just learning about money, finance, investment and what have you. You can watch programs on TV or read some books. Your newspapers will have a Finance Section so you don't have to put money out.
Just search the Internet and you will have tons of information on these. Start reading on investments, stocks and securities, finance, trading and other streams of income.
Start with a basic book and move on from there. You can borrow this in your Library. You will know what to pursue. Boring? Take a Look...Picture this in your mind.
Maybe, you're really not interested in my own story but I will still share it with you just to let you know it is possible to invest on your own.
I started investing around 15 years ago. We did not have much money then but I thought I wanted to learn how to invest as part of my money management learning.
I went to the bank and the bank officer suggested automatic withdrawal of $50 each month to go into an investment account that earns better interest than the checking account. After a year, I checked and I have enough money to buy 12 stocks of the bank I do business with.
Then, I learned about Dividend Reinvestment Plan (DRIP) which enabled my dividends from the twelve bank stocks to purchase more stocks without paying fees. I did this and with additional investment after the years, we are now proud owners of over a thousand shares. Indeed, DRIP is one of the investments we hold on to. More shares every quarter are added to our investment.
And guess what? I have learned enormously since that first step. Just take the first step.
2. Make your investment strategy advisor proof
Band-aids splints and crutches mark many small investors who survived 2008-9. However, when your house burns down, you have to build another one!
But maybe this time, you'll build it yourself and make it fireproof. Maybe this time, you'll do your own research and your own investment management. Maybe making Bankers richer as they lose you money is not smart. Perhaps, the idea of paying them regardless of whether your investment makes money is now clearly foolish.
Think of building your own investment strategy in the same way you might think of choosing a path on your journey. You will find that it demands commitment to learn. Forget about those easy millions that you read about from investment promotions.
Think of building a house. Let's just look at a simple step by step program that you can handle yourself. Not a Taj Mahal...but not a tent in a swamp either! Besides, doing your own investment will enhance your own sense of self worth as well as your own financial worth. What better investment than this can you make?
3. Change your Investment Mind Set
When I started investing, my husband Grumpy was not with me at all. He was suspicious of any investment other than buying bonds. He was upset when I started buying stocks. He thinks investment is a losing proposition. You never win.
As I progressed, Grumpy eventually got into the band wagon. He got interested and because he enjoys learning and doing research, he started giving recommendacious and they were winning ones. I slowly gave him the reigns in making the decision on what to buy and sell.
Now, he watches the market like a hawk and because he beats the market each year, he has a radical change of mind.
4. Start Investing in the Sector You Know Well
Your investment choices will be better informed. Start with an area you know very well. Cars! What's hot and what's not and who's next? If you work in the health sector, start there. Chances are you already know a lot about the companies in your sector.
Read and research the many articles and websites you come across. What's in the pharmaceutical pipeline? What care services will expand? Will rail services grow... hmmmmm. Who will do well when we finally rebuild roads and other infrastructure?
5. Find an investment mentor
Surprises come when you seek for it. Among your circle of friends and relatives, there are always one or two who have done this before. Make them your mentors. Their experience will be useful.
In your office, you will be surprised at what you will get when you seek for it. Your boss maybe a successful investor. He will just be happy to share with you. People generally are happy to be asked. This can expand your network in the office or in your line of business. This service is free.
6. Assess your current resources
Your best investment resource is Yourself. You can start by just listing all your assets and your liabilities. It is good to have a picture of where you are in your finances.
Start with your financial resources but do not stop here. You have your personal resources you can mine to provide you the best life offers. You have your knowledge and skills that you can turn into money. Take good care of your resources and make them grow.
Your best investment is in yourself. Invest in it first before you spend a dime of your paycheck.
7. Set your investment goals
Make it Simple, Focused, and Achievable. Now that you are full of knowledge, start with the basic things you need such as a house, a car (maybe, not this one in the picture but don't stop dreaming), education or other "must haves".
Seeing your goals as clear as a laser is key. Make it simple, focused and achievable. You don't have to make it perfect. You can review it later on and with more experience, maybe your goals will change as well. And really look hard at needing a car. Uber? If there is ANY other transport... really think about the alternate costs!
8. Develop your investment strategy based on your goals
First, identify the things you need to make each of your goals come true. Of these goals, which ones do you need to do first?
Find that one step which when done will yield you the best results. Which of these do you already have the resources to do right now? Remember timing is everything. Include the best strategies you can think of. Sometimes, these strategies can be grouped or executed simultaneously.
You may want to check out the DRIP (Dividend Reinvestment Plan) if you are the type who does not want to actively engage in your investment. With DRIP, you choose a few quality companies with substantial dividends and just buy their shares. Your dividends will just keep buying new shares, and when the shares go down, your dividends will buy more shares. When the stock goes up, you can partake of capital gains. Know your own risk tolerance. As you get more courage, you can try out the riskier investments.
I started with 12 stocks of one of the top banks in Canada that has a DRIP program. That was all I could afford at that time. But I read somewhere that you don't wait until you have so much money. No, set aside an amount you can afford and just start.
Consider this as your tuition fee to enrol in a course on financial management. I have added more since then. There are many companies that manage their own DRIPS. Maybe the company you work with now has one. Check it out. Fifteen years later, I am now a proud owner of over a thousand shares. Your dividends just keep buying new stocks and because there was or were stock splits, I got lucky.
9. Implement your investment strategy
Take responsibility. OK... now we are into old values... but we are so comfortable in today's world with feeling we are entitled... or everything is the Government's job....or somebody else should protect me. Believe me... those values will have you crashing with the market next time... and there will be many next times.
The investment market changes constantly. It is dynamic. This does not mean you focus on your computer screen the whole day watching your stocks as they go up and down. This is why you have a plan. And also why you set regular times to review it based on your own risk tolerance.
10. Make your investment a facilitator of the values important to you. Some know the price of everything and the value of nothing.
Remember, your investment is only a facilitator of the values important to you. You need always to have your values clear, or you will be pursuing wealth at their expense. Some know the price of everything and the value of nothing. Get your goals clearly in front of you and manage to get there.
I know I can gain much by investing in cigarette companies but I just can't bring myself to do it. I am aware of the risk in investing in green technologies but I think some people have to support these attempts at developing technologies that will make our planet better not destroy it.
Your investments are there to enhance your life and what is important to your life are those that you value most. You need to have confidence to say that this is the best place to put our money right now. This can change but at that moment, make sure it is where you want to be.
Global Lifestyle Articles