Many Baltimoreans like the rest of the nation have barley seen any recovery in their 401k accounts and other investments since the recent financial crisis. This is mainly because they are investing in cookie-cutter investment funds that are designed to reduce risk through diversification but also have the effect of reducing large gains. Many would like to do something that would improve the performance of their portfolios but don’t know where to start. Well this and future articles in this section of the lodeplus.com will help you get started.
Successful investing involves simplifying the minutia of information about business and finance into usable information to make informed decisions that will generate profit. Investing is mostly about managing risk and reward. One key to successful investing is to evolve an understanding of the risks and determining if the rewards are great enough to take those risks for particular investments.
Notice that I said ‘evolve an understanding’. This is because it is a process of continuous analysis. Not only must one evolve their understanding of an investment, they must also modify the parameters of the basis of their understanding as the environment affecting their investments change.
So where do you start? Start by opening a brokerage account or exercising the brokerage option if available in your 401k account. This will allow you to purchase individual stocks that you are interested in for your portfolio. You can now begin your analysis. You’ll want to make sure you place ‘Limit Orders’ instead of ‘Market Orders’. Limit Orders allow you to set the price at which you wish to buy and avoid price spikes that can cause you to buy too high. Your brokerage house will have more information on these types of orders or you can check back here for future articles.
You’re now on your way. You will soon appreciate having control over your future and making informed decisions to grow your nest egg. There will be winners and losers. But with a little effort, you could significantly improve your future.