FollowLet’s talk about Wealth Creation Investing.
Wealth creation by investing is definitely possible, but it requires a little luck and some good timing, as well as plenty of perseverance and due diligence. A good place to start would be to determine where you are currently situated financially and where you would like to end up.
Equities, Options, Forex, Futures and Commodities.
A few of the main ways to invest in the stock market include Equities, Options, Forex, Futures and Commodities. With each of these you could be quite successful in doing what everyone wants to do, which is trying to build wealth; but, it’s important to bear in mind that they all have their own set of risks and rewards that must be taken into consideration. Whatever your investment choices, your basic goal is probably one and the same with everyone else who is trying hard to build wealth. The fact is that 300,000 brand new and shiny millionaires emerged during 2013. It’s exhilarating when you hear this and also when you hear about the stock market being up by 30 percent, but chances are you didn’t see any returns of that caliber in your pocket, did you? Generally there’s quite a gap between investment returns and investor returns. But, you can minimize that gap and learn how to accumulate wealth by following a few simple tips:
Cutting costs
Reducing investment fees, like trading costs, management fees and expense ratios, can be one effective way for improving the returns that you actually get in your pocket.
Index Funds
Index funds cost less than funds that are actively managed by a money management team. According to a Jan. 2014 research paper published in the Journal of Indexes, index fund portfolios outperformed active funds portfolios 83 percent of the time.
Diversify
Diversifying- One investment strategy involves investing in a wide range of asset classes, which can mitigate the financial blow of market dips, while still reaping all of the benefits of upswings. For many investors, diversifying can be a good strategy because it can lessen risk.
Due Diligence
However, if you are hyper in-tune with a particular company and their fundamentals and technical analysis are strong; then focusing on one stock can be much less risky than picking a basket of stocks or mutual funds that you know nothing about. Warren Buffet, the most successful stock picker of our time, believes that buying single stocks is better than blind diversifying.
Buying Retail
Investing in retail could return some incredible gains right now. Along with recent years’ worth of wealth creation in the stock market paired with the rebounding housing market, has come the public’s desire for spending. They especially love spending on high-end services and goods. Luxury stocks, like Tiffany and Michael Kors, have done exceptionally well during the past couple of years. Big box and discount stores, however, have had mixed results recently. It’s possible that we will see the retail sector build wealth for its investors this year and for several years to come, but then again, only if the economy in general, as well as creation of new jobs, continue to grow somewhat over that period of time.
Dollar Cost Averaging
Getting the benefits of dollar cost averaging by investing set amounts on a regular basis could be a good strategy for building wealth, but it could also have some possible downfalls at the same time.
Conclusion
Successful investing is a science that revolves around discipline, research and logic, not intuition, emotion or inside tips. Emotions certainly do play a significant part in many investors’ decisions, however whether you choose Forex, Real Estate, retail, or the Stock Market for your wealth creation, remember that emotional investment choices cost many investors a large part of their projected returns. It can actually cost you between one and six percent of your returns to make an impulsive move in commission alone.
If all of this sounds overwhelming than an investment manager can help keep you levelheaded and on-track when you’re tempted to make emotional decisions.