Five Tips To Help You Get The Most Out Of Your Investments
At the beginning of your investment journey, it is possible to be overwhelmed with a lot of advice from various books, videos, and content creators. You may find various articles or videos on the best stocks for options trading, the best short-term investment options, and various other catchy titles that give you investment tips. However, this isn’t the way to approach investing if you want to be successful in the long run on your own.
As experts in the field, we at Westgroup Financial Management Inc have written down five tips to help you get the most out of your investments.
Tip #1: Know the power of compound interest
Albert Einstein once described compound interest as the “eighth wonder of the world,” saying, “he who understands it, earns it; he who doesn’t pays for it.” Compound interest is when the interest one earns on a principal balance is reinvested and generates additional interest. This concept helps accelerate the growth of money such as that in a savings account. While young people may not have much money to invest, time is on their side, and they are in the best position to take advantage of compound interest to accumulate wealth. More people should be exposed to compound interest early on, as it makes such a difference in the amount of money they’ll have at their disposal come retirement.
Tip #2: Understand the value of staying invested
Fluctuations in financial markets are inevitable. All investment carries the risk that markets will periodically suffer from price declines. Some of these may be gradual, while others may be sharp and sudden. These periods of price volatility can leave many investors understandably concerned, but it’s important to maintain perspective and focus in order to navigate through these times. Rather than fixating on the market downturn, you should keep your focus on why you invested in the first place. It’s essential to keep sight of your original long-term investment plan. Ultimately, staying invested for longer periods generally tends to offer a higher return potential simply because long-term investing increases the chance of positive returns.
Tip #3: Learn to manage your emotions during market downturns
Watching the stock market swing up and down is unnerving for most investors. The fear of incurring major losses could make it tempting to sell your investments. Yet while this may temporarily calm your nerves, doing so could put a significant dent in your long-term finances. When it comes to managing emotions and expectations during market downturns, there are three essential tools that you can use. You should look to take some time to relax; you should remember that the market always corrects itself over time; and that your financial professional is there for a reason.
Tip #4: Realize that investing is a long-term play
Short-term fluctuations in the market will not stress you more if you make investments for the long term. The volatility in the market will slowly lose its effect on your investment, and your long-term plan will pay well at its maturity. Investing in long-term plans is hassle-free. You invest once and then relax. You don’t need to keep track of the daily fluctuations in the market. The long-term investment fits all types of future expenses, such as education, retirement, car, etc. Long-term investments are a disciplined approach toward saving to fulfill your desire. What matters the most while investing is getting good returns over time. Get a long-term approach if you want to make the most of your investment.
Tip #5: Passive index style investing wins nine times out of ten
Passive investing is a long-term strategy for building wealth by buying securities that mirror stock market indexes, then holding them long-term. And the goal of your investing this way is that you basically want to replicate the returns of that particular market index. Index funds can be a good option for passive investors. They simply track the rise and fall of the chosen companies/assets within the index. Like fine wine, the longer you hold your investments, the longer they have to mature and give you decent returns.
If you are looking for financial planners in South Surrey, BC, reach out to us at Westgroup Financial Management Inc. Our passionate professionals are helping families and businesses succeed in their financial goals. Our team is highly committed to ensuring your success through a calculated strategy. We are experts in financial planning and specialize in finding the best solutions to meet your financial needs. We have built our business around integrity and honesty with a focus on changing your financial path for the better.
Our services include wealth management, financial investments, insurance planning, estate planning, business services, and charitable giving. We offer our services to clients across South Surrey, White Rock, Delta, Vancouver, West Vancouver, North Vancouver, New Westminster, Coquitlam, Burnaby, Langley, Chilliwack, Port Coquitlam, Port Moody, Mission, Abbotsford, Pitt Meadows, Maple Ridge, Squamish, Whistler, Victoria, Nanaimo, Kelowna, Penticton and Kamloops, BC.
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