Posted 9th January 2017
• Do you have a plan?
• Smart rules for investors
• PLUS: Be ready for my next trade idea
Do you have a plan for your long-term money?
I know you like to trade. That’s why you’re reading this. So you have a chunk of money that you trade with, looking for a fast profit, to grow your money quickly.
That’s your trading bank or your ‘risk capital’. It’s money that you don’t need to pay the bills.
But do you also have a portion of your money that you want to grow at a slower pace, and that you don’t mind being tied up for a while – money that you invest for the long term?
I’m not talking about your cash savings. The money you have on deposit that you can get your hands on quickly if you need it. That’s different. You have to suffer near-zero interest rates on that – because you need the luxury of instant access.
I’m talking about money you don’t want to expose to the higher risk of trading, but that you want to grow at a better rate than the bank will pay you.
With interest rates near zero, many people put their money in the stock market. And it’s very simple to do these days.
You can do it through a fund manager. Give them your money and let them charge you to manage it.
Or you can do it yourself, finding investment ideas you like and investing direct through a stock broker. It’s cheap and easy to do that online.
Personally, I read plenty of expert research and attend investment conferences. If I like the sound of a stock someone’s keen on, I’ll read as much as I can about it. And if the rationale for investing in it makes sense to me, I’ll consider investing.
For me, that’s an important point… almost a ‘rule’ of investing.
Why you must understand your investment ideas
You should try to understand what you invest in. Or find someone who does and whose opinion and expertise you trust.
Don’t invest on hunches or throwaway newspaper tips. This is your money. Be selective with your investments.
We think a lot about how important it is to be disciplined in trading. Managing your risk properly, having a trading plan and so on. Well, it’s the same for investing in stocks – why wouldn’t it be?
And here’s another ‘rule’ for investors: Ignore the market’s daily mood swings.
Look at the markets right now. Both here and in the US, stock markets have been hitting new highs.
The Dow is within a gnat’s whisker of the 20,000 level. Will it get there… and advance beyond it? Or will it poke its head above there and then slump as buyers take profits and short-sellers pile in to make money as it falls?
Wait and see I guess. The point is, up at these key levels, markets can and do move quite a lot in a day. Now, as a short-term trader, the kind of one-day moves we are seeing in stock market indices lately may be important.
But as an investor, thinking about your long-term money, it’s different…
As an investor in the stock market, you really shouldn’t let these intra-day moves bother you. Not if you’re investing for the long-term – and in a company that you want to invest in (because you believe in it).
The fact is, many investors are sent into panic every time there is a strong short-term move upwards or downwards. But I wouldn’t let these daily moves dictate your investment policy.
Ignore the short-term ‘noise’ and look for longer-term trends instead.
And of course, it’s worth remembering what your goals are here. And that’s going to vary according to your own situation and your age.
On the hunt for strong investment ideas
For me, I have some time left until I retire. But I do need to grow my money so that I can support myself in retirement. I think investing in the stock market is a good way to do that – alongside my house, of course.
Historically, stocks are the world’s best performing asset class.
Now a lot of people rely on their pension funds to get them exposure to stock markets. That’s fine. But it’s also worth looking to invest direct in shares and sheltering them from tax in an individual savings account (ISA) (if you’re a UK investor).
Pick the right companies to invest in, and you could grow your capital powerfully over the long term… and even receive a welcome extra income in the form of dividends.
When you look at investing like that, you should consider days when the market is down as an opportunity.
Because the chances are, that stock that you liked the look of yesterday is probably going a little cheaper today!
Look out for these ideas
And if you’re looking for some interesting ideas for your longer-term money, I have something I think you’ll like. It’s at the smaller end of the market – and for that reason it would be classed as a ‘riskier’ investment.
But with that higher risk comes the potential for a higher return – I’m talking the chance to multiply your investment a few times over the next year or so – that’s what the report I’ve seen is predicting. If that kind of opportunity excites you, stay tuned. I’ll make sure I send it over when I can.
But I know that even if you are putting a portion of your money to work in longer-term investments, you’re probably just as eager (if not more) to see a quick turnaround. You’d like to be making money from your short-term trades, too – right?
I’m hoping to send out my next trade idea to members of Profit Watch Pro in the next day or so. It could be trading the Dow Jones index, if I get the entry set-up I’d like to. Or it might be one of the individual stocks I have on my growing watch list.
As ever, with trading it’s all about the charts for timing, risk versus reward and money management. If all three stack up on any of my watch list trades (and three of them are very close!) then I’ll be issuing trade emails right away.
The beauty of Profit Watch Pro is that there is no commitment to the service if you decide it’s not for you. You pay per month and can leave when you like. And I let you try it out for your first 30 days with a full money-back guarantee. (If you cancel in that time, I’ll refund your small joining fee in full.)
So give it a go. I think you’ll like it – and if you join right now, you should get my next trade.
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by Max Munroe
Posted March 14, 2013