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There’s no denying that investments are a veritable risk. No matter how you look at it, the market is going to fluctuate and experience ups and downs.
The good news is that little guys like you don’t have to experience any of these ebbs and flows, especially if you’re playing the long game. This means holding an investment for at least five years so that market fluctuations won’t affect your portfolio.
Here are some helpful tips on how to invest successfully in 2020:
1. Keep Your Calm
Every 10 years or so, the market goes through what is known as a “correction.” This is usually when everything goes belly up and those investing for the short-term are sure to feel the pinch.
The problematic thing about a correction is that you never know when it’s going to end. This period is known as a bear market and is characterized by a 20% depreciation in stock value.
If you’re able to keep a cool head during this time, you can emerge on the other side relatively unscathed. The key is to invest with your head, not your emotions.
Keep your wits about you, and automate the process through automatic deposits so that you can add to your account without constantly going through the books.
2. Diversify Your Portfolio
Diversify your investment portfolio to protect yourself against market fluctuations. This means including a combination of stocks, bonds, mutual funds, etc.
Be sure to invest in both local and international markets, and hire a financial planner to help you organize ideal asset allocation centered on factors like your age, income, risk tolerance, etc.
You can also use a tool like InvestoTrend to increase your financial knowledge.
3. Invest More
The best way to get the most out of your investment portfolio is to invest consistently over a long period of time. Although we can’t control the short-term activity of the economic market, we’re in total control of how much we can contribute on a monthly, quarterly or even yearly basis.
That’s why you should always increase your contribution whenever you can. If you happen to make a little extra one month, funnel that surplus into your investment account to maximize your returns.
The same goes for windfalls, an income raise, tax returns, or dividends. Any extra cash you can allocate to your investments will come in handy in the long run.
4. Consider Your 401(K)
For most people, their retirement plan is their first foray into investing. It can be really exciting to watch your investment portfolio grow, especially if you’re lucky enough to have an employer who’s able to match your monthly contribution.
This means the more you contribute, the more your employer will pay into your retirement fund. In addition to this, be sure to save 15% of your monthly salary.
The great thing about your retirement fund is that the 401 (k) and 403 (b) are tax-exempt. You’re not only benefiting from compound interest but you won’t have to worry about paying taxes on it either.
5. Invest in Fun Things
Let’s say you still have extra money left over after you’ve applied all the strategies set out above. This is a great opportunity to try something new, like investing in new stock and see how it grows over a period of 12 months.
You can make things exciting by investing in a company you like so that it’s easier to track progress.