Knowing When to Invest
Having some spare funds or cash in the bank is not enough reason to plunge into any investment. It may even be wiser to leave your money in a savings account at some time rather than taking the risk of investing when you are supposed to be watching the market or gathering information that would enable you make a wise investment decision.
Taking adequate time to gather enough information on a particular investment option or the prevailing market situation is the mark of the wise investor. Not taking time to get adequate information before investing is the same thing as taking a ride to the casino with your hard earned money and you should be prepared for what you get at the end of the day.
Some factors that should be considered in determining when to invest include the following: prevailing market situation, fundamental and technical analysis of investment instrument, gestation period of investment (how long the investment is to be held before taking profit), entry and exit prices, alternative investment options and size of investment.
It is important to know the prevailing market situation in order not to get into a wrong position as a result of the timing of the investment. Buying an investment with good fundaments in a bearish market may deal a fatal blow to your fund if the bearish condition endures for a longer time than anticipated, in such a situation holding on to your cash and waiting for signs of reversal with the aid of technical analysis or considering alternative investments would be more prudent. These considerations serve as signals to the successful investor.
Investment is an art best undertaken with a strategic approach hence it requires the discipline of following a well articulated and written procedure for instrument and market evaluation. By adhering to a written procedure of evaluation, the successful investor acquires the ability of identifying good entry and exit signals consistently. This will better serve in achieving the goal of the investor than the amount of money invested.
Having some spare funds or cash in the bank is not enough reason to plunge into any investment. It may even be wiser to leave your money in a savings account at some time rather than taking the risk of investing when you are supposed to be watching the market or gathering information that would enable you make a wise investment decision.
Taking adequate time to gather enough information on a particular investment option or the prevailing market situation is the mark of the wise investor. Not taking time to get adequate information before investing is the same thing as taking a ride to the casino with your hard earned money and you should be prepared for what you get at the end of the day.
Some factors that should be considered in determining when to invest include the following: prevailing market situation, fundamental and technical analysis of investment instrument, gestation period of investment (how long the investment is to be held before taking profit), entry and exit prices, alternative investment options and size of investment.
It is important to know the prevailing market situation in order not to get into a wrong position as a result of the timing of the investment. Buying an investment with good fundaments in a bearish market may deal a fatal blow to your fund if the bearish condition endures for a longer time than anticipated, in such a situation holding on to your cash and waiting for signs of reversal with the aid of technical analysis or considering alternative investments would be more prudent. These considerations serve as signals to the successful investor.
Investment is an art best undertaken with a strategic approach hence it requires the discipline of following a well articulated and written procedure for instrument and market evaluation. By adhering to a written procedure of evaluation, the successful investor acquires the ability of identifying good entry and exit signals consistently. This will better serve in achieving the goal of the investor than the amount of money invested.
No comments:
Post a Comment