I’m sure that at some point in your life, you have thought about retiring comfortably, buying your dream car or jetting off on your dream holiday.
The list goes on. If you are an average worker who is earning your daily bread, is this possible? Probably yes, if you have additional sources of income.
The idea of making your money work for you seems appealing, and that’s why many have turned to investing to help them achieve this. But, let’s be honest. Making money from investing is never easy. If you happen to know anyone personally who became very successful just by investing, it’s probably because they have acquired a certain level of knowledge or have some sort of astute strategy.
Before making the big bucks from investing, it’s important to first know why people are NOT making money from investing. Read on to explore some of the most common pitfalls.
Too Much Information
Ever tried to search for a piece of financial information on Google and it returned thousands of results? It’s tiring and time-consuming to have to sift through so much information just to find what’s relevant to you.
No Access to Professional Analysis Tools
For most of us, we do not have access to the investment analysis tools that professional investors use. A lot of the time, these are required to make the most informed investment decisions.
We are human beings and therefore, we are driven by emotions. This is especially the case when our money is at stake. Let’s face the facts.
Do you ever feel fear coursing through your body when the value of your stock holdings suddenly drops, by say 30%? When fear hits, you may become irrational and make the wrong decision.
Now that you know why people so often trip up when investing, it’s easier to fine-tune your investment strategy.
TAKEAWAY: The main takeaway here is to remove the irrationality aspect of investing by being able to make the most informed decision with the relevant information and analysis tools. I’ll explain how you can achieve this below.
1. Gauge the Sentiment of Markets
It’s important to look at the macro aspects of the market before looking at the micro – the individual stocks. If the market is too overbought, the chances of stock prices falling is higher as investors start selling their stocks to lock in profits.
Use the FIGS Sentiment Score to gauge how overbought or oversold the market is before diving into the industries or stocks.
2. Educate Yourself
After finding the markets you are interested in, find a sector, stock or fund to learn about it. You can get the information here at our LEARN section. Sometimes, learning can get boring, especially when you’re reading stuff that doesn’t interest you.
But the difference here is that we desire to make the process of learning about investing fun for you. Other than reports and news, you can also learn about potential investments via videos and infographics.
One way to be successful is to learn how people become successful. Here are two quotes from successful people whom most of us are familiar with.
‘An investment in knowledge pays the best interest.’
- Benjamin Franklin, Founding Father of the United States
‘Never invest in a business you cannot understand.’
- Warren Buffett, Famous Investor
What can you learn from them? Read the takeaway below.
TAKEAWAY: Educating and investing in yourself are the keys to long term investment success
3. Analyse Your Investment with the Right Tools
We’ve talked about making the most informed decision so you’ll feel more confident and less irrational. But what is it about making informed investment decisions? And how does that increase your chances of success?
It’s like taking an exam. When you have prepared well for it, you’ll feel more confident answering questions because you know you have a higher chance of getting the answer right.
So, using the same analogy, if you are well prepared before you invest, you’ll feel more confident. What I mean by being well prepared here is to understand the key information of your investment and its risks.
Key information include considerations such as a company’s business model, how it makes money, its competitive strategy in the market, its risks and potential returns etc. Get the idea?
Professional investors usually use various analysis tools to analyse their risk. However, if you are a retail investor, chances are that these tools may not be readily available to you.
That’s why we want to help you invest like a Professional using our ANALYSE TOOLS here. See how they can help you analyse your risk, and much more besides, below.
It calculates the probability of you achieving your desired returns from your stock over a certain period of time. Knowing the chances of your profits will give you a better idea of whether you should buy the stock and what its risk is.
It tells you the potential returns of a sector or theme, based on the difference between analysts’ consensus price targets and current stock prices.
It gives you the overall forecasting accuracy of each analyst. So, you can find out what the best analyst thinks of your stock picks; whether it is a buy, hold or sell.
Here’s the Bottom Line
Making money from investment is not easy, but neither is it impossible. There are many people who have succeeded before, and so can you.
Sometimes you can never comprehend the market’s behaviour, but what you can do is to make the most informed decisions to improve your chances of profiting. It involves learning and using the right analysis tools.
Still dreaming about the car that you always wanted? The holiday that you want to go on? Yes. Invest smartly to make your money work for you so you can reach those goals.