What scares beginners?
April 15, 2007Thanks for visiting! If you like what you're reading, you may want to subscribe to my RSS feed.
Fool.co.uk published an article with advise for first-time investors, which I think sums it all up nicely and confirms what I have said about index funds, ETFs and diversification so far.
The author gives a list of tips on how not to lose money, which reads as follows:
- don’t put it all in one company, especially not a small one
- spread it across large companies by using a tracker (we’ve seen that you can get some pretty decent returns in the long run, so return on investment is not an argument in favour of buying single shares)
- diversify by buying companies in different sectors
- keep of bandwagons - when “the blokes down the pub” are all talking about the latest investment craze, that’s when it’s time to look elsewhere
- drip your money in, regularly, over a longer period (some index funds allow a monthly contribution of as little as £20)
- only invest for the long term
While he then concludes that he’s probably gonna put all his money “on a high-risk small company”, this is clearly not what you should take away from this. When you don’t have much money to invest, do yourself a favour and check against these rules to avoid disappointment!
