Three ways to boost your chances of investing success
When it comes to investing
in shares, there were three rules that Keynes followed to his benefit…
Investing tip #1: Invest for the long-term
Regardless of what the market is doing, stay in stocks. And don’t try to time the market.
Keynes learnt this after not trading well during the 1929 stock market crash.
Make sure you stay committed to equities during a downturn, David Thornton in Penny Sleuth
explains. By trying to time the market, you can miss out of the early stages of a recovery, which is when big gains are up for the taking.
A long-term investment approach is key to this.
Investing tip #2: Invest in value stocks that pay dividends
This involves investing for the long-term too. Buy into stocks that are out of favour and cheap then wait for the market to return them to favour.
As a private investor, this is one of the advantages you have. You have time to wait. Fund managers on the other hand don’t and tend to chase short-term trends.
Investing tip #3: Diversify your portfolio away from the broader stock market
Keynes understood that the best performing portfolio wouldn’t relate to the make-up of the broader stock market. He built his portfolio on this premise.
You shouldn’t try to mirror the components of an index. If you want to do that, invest in an index tracker. Take advantage of the different shares on offer in different sectors.
What Keynes realised is that private investors can take advantage of the stock market in a way fund managers can’t. You can afford to be patient and stick with a long-term view.
Make sure you use these advantages.
So there you have it. Improve the performance of your share portfolio by following these three tips.
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