Taking Risks In Order To Reap The Rewards

It usually takes more than just throwing money at stocks that are recommended by expert in order to consistently make money through stock investing.  Some people invest in stock merely because that is the thing to do with their extra cash to make it grow or to save for retirement. 

However, your investment in stocks should follow a plan. The plan that you have drawn out doesn't have to be the same as what other people are doing, but it isn't a bad idea to choose one of the common plans out there. For example, most plans have a certain mix of 'risky investments' and 'safe investments' they follow. This usually means a certain percentage of the money invested will go into bonds, certificate of deposits, or treasury bills, while another percentage goes into growth stocks, and yet another percentage goes into those large blue chip stocks. The percentages you choose will be based on how risk averse you are, but the important thing is that you stick to whichever plan you choose.

The second thing you need to think about is to find out how much you know about business and particular types of business. If you have very limited knowledge, you will want to consult with an experienced, full-service stock broker who provides you with tips on what stocks to buy and helps you stick to the plan you chose. You should choose a broker who prefers the same level of risk as you. If you are a corporate executive and you spend a great deal of your time analyzing business finance ratios or marketing plans, you are probably going to be more inclined to choose your own stocks. You may be happiest with an online trading company that gives you cheep transactions and has plenty of information available for you to use to analyze companies yourself. If you're neither the corporate executive or a full novice, you may want to combine a full-service broker with plenty of your own research. Many people really enjoy stock investing this way.

You need to understand that there is no such thing as free money. Stock trading can make you money without you having to do work, but it can't make you money without you risking the money you have, unless you're doing something illegal. So stock investing to make money is basically taking risks in order to reap the rewards. Nobody makes money on every decision. The key is to stick to your investment plan and make decisions that will be profitable more than 50% of the time. This is true whether you are an aggressive investor or a conservative one.

The main difference is that the aggressive investor makes more on each profitable decision, and loses more on each bad decision. Over the long term a wise aggressive investor will make more money, but a wise conservative investor will generally only lose large amounts of equity during depressions or severe recessions. The aggressive investor may lose large amounts of money at any time due to business failures, but can also make huge sums of money when a small corporation suddenly becomes a big corporation. So either type of investor will lose and make money from time to time, the key is to be diligent with the type of investing is best suited for you.

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