How to Make the Most of Your Stock Investments in 2016
We’ve talked before about the cost of financial freedom. In this post we’re going to talk about how investing figures into that, and how to make sure that your investments–particularly those that involve the stock market–stay safe in 2016. Why are we dedicating an entire post to stock investing in the upcoming year? It’s partially because investing is an important part of financial success. It is also partially because this year looks like it might be a shaky one for the market.
Why 2016 Looks Shaky
The year began with the market plummeting hundreds of points. This, naturally, made investors of every sort nervous. Nervous and panicky investors can cause even more chaos in an already unstable market. Even if the market had remained stable in January, 2016 is a federal election year and that can cause companies and investors to act unpredictably, particularly since Citizens United. When you add these factors to an economy that has been trying to grow and is greatly affected by the international economy’s behavior, you can see why this is not a year to take big risks.
How to Weather the Storm
First, you might be tempted to simply sell your stocks and take up stock investment again once the market has evened out. This is the wrong way to go. The market will eventually even itself out and your dumping everything now is more likely to cost you more than you could ever hope to save by leaving your portfolio mostly alone.
In terms of new investments, however, here are a few tips you will want to heed.
Satisfy your gambler’s spirit. When utilizing binary options in trading, instead of investing directly into a company’s stock portfolio, you (for lack of a better term) bet on how a company’s stock will perform. If you’re right, you earn money. If you’re wrong, you lose your investment (and potentially more, so be careful here). Remember, as a responsible gambler: never bet more than you can afford to lose.
Slow and steady wins the race. Instead of investing in individual companies, invest in commodities. Commodities’ prices are determined based on the supply and demand side of the market and are less likely to behave erratically than corporate shares. It is important to note here, that oil prices play a large role in the commodities market so if you want to invest in the steadiest commodities available, look for alternative and renewable energies.
Go for the gold. Whatever your feelings about the gold standard, investing in gold and other precious metals is a good way to keep your investment safe. The price of gold rarely fluctuates and even when it gains or loses value, it rarely drops or soars the way other market shares might.
How much is a dollar really worth? Right now the USD is at 90 (out of a possible 100). This isn’t the greatest news for people who are interested in currency (aka Forex) trading. Currency traders should also take note that many of the world’s currencies have plummeted in worth as many economies (like China and Greece) have gone into tailspins. This will likely not be a great year for profiteering on the Forex market.
Read the news. Read your local and the international business news. Keep track of what is going on within the companies in which you have invested. Pay attention to mergers and takeovers as these tend to have a huge effect on a company’s stock prices. Pay attention to quarterly profits and losses as well as their product development and customer satisfaction data. All of these factors contribute to the behavior of a stock and can give you clues about whether to buy or sell. Don’t just take your broker’s word for it.
Finally remember that the market eventually stabilizes. You won’t keep your stock investments safe if you panic and dump them every time there is a blip. Talk to your financial advisor. Learn how to read the signs and play it safe this year. Next year, who knows? Maybe the market will be more of a bear than a bull.