Investing tip #1: Look to the future
One of the best ways to give your money the best chance of success is to buy tomorrow’s profits with a margin of safety today. You need to envisage what could happen in the future.
By applying this type of forward thinking to investing, you have the chance to tap into new emerging trends or technology. Just look to the future and see where the companies you’re interested in see themselves.
Investing tip #2: Buy at good prices
Paying too much for a stock means you’re just giving money away and forgoing profits.
Decide how much you’re willing to pay for a stock and wait. The price should come down at some stage, allowing you to pick up shares.
With this in mind, always have a short list of stocks that you want to buy but are at prices you don’t want to spend. If the market pulls back you may very well get your hands on shares at those prices.
Investing tip #3: Let your winners run, but keep an eye on things
When stocks you own start to do really well, it can be difficult to fight off your emotions. Your gut will be telling you it’s time to sell.
You want to give yourself the best chance of profits but by not risking too much downside.
To help you decide whether or not to keep hold of a stock that’s performing, ask yourself these two questions, Mike Barrett in Daily Wealth explains:
Are the shares fully valued now?
Do the reasons behind you buying the share in the first place still stand?
You need to be honest with yourself and let the answers to these questions help guide you to make the best decision about whether you sell or not.
If you’re not 100% sure either way, running a tighter trailing stop loss will make you sell before the price drops too much, preserving your profits.
So there you have it. Three tips to increase your chances of investing in winning stocks.
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