With low interest rates, low bond and passbook yields, as well as few investment alternatives, the time for the stock market’s revenge seems to have sounded in view of the recent rise in stock market indices and the return of investors in the equity markets in recent months.
However, the financial culture of the French remains limited and often truncated. Some put forward cultural reasons: naturally cautious when it comes to savings, the French are known for their very down to earth approach to their “bas wool “which favors safety! But things are changing, the stock market is becoming more democratic thanks in particular to new means of information via the Internet, but also to online intermediaries and fitness which are disrupting the approach to savings and its management.
How to define your investor profile?
As in everyday life, some investors are more reckless than others. On the stock market, there are those who like to take risks, sometimes too much risk. Conversely, the most cautious are sometimes too timid to seize opportunities at the right time. The ideal would be a mixture of a “reasonable dynamic” profile, which is sometimes contradictory … The important thing is to know yourself well and above all to be honest with yourself … In short, not to force your nature using its own qualities. This practical guide for beginners in the stock market aims to lay the essential foundations of financial investing in stocks.
Here are some tips to limit risks on the stock market. The stock market is not a long calm river … Placing your savings directly on the financial markets involves significant risk of capital losses due to the often significant daily fluctuations of the shares listed there. It is customary to say that an individual should invest in the stock market only the portion of his savings that he can do without! Another rule of thumb is to have enough time not to be dependent on short-term speculative fluctuations in the stock market. A minimum investment horizon of 5 years is generally recommended.
Information first!
One of the keys to a good investment in the stock market is through information … It is therefore necessary to follow economic and financial news on a daily basis so as not to be taken aback by the evolution of stock market trends in markets which can be versatile depending on the evolution of the economic situation … It is therefore essential to follow the life of companies, in any case, those in which you own shares! If reading specialized economic journals (Les Echos, Le Revenu, etc.) or financial, stock market and asset investment sites is highly recommended, beware of the often erroneous or misleading information circulating on forums or social networks and which above all have the objective of artificially influencing the trend of certain values.
Knowing how to stay Lucid
Concretely, it is recommended to set earning targets, but also a maximum loss floor … It may also be useful to define an investment period that will correspond to your investment horizon value by value. Knowing how to take your profits is essential, but having the courage to cut your losing positions in order to limit certain losses is all the more so, which is not always easy to admit! However, this constitutes a primary quality of the stock market investor.
Admit your Mistakes
Knowing how to cash in short-term losses on a security to better earn in the medium term on your entire portfolio is a notion that is sometimes difficult to understand and unnatural. Recognizing that we made a mistake will, however, prevent you from many setbacks. On the stock market, and undoubtedly more than elsewhere, the error is human, but it is better to quickly admit it without waiting for a miracle, because, in the end, “the market is always right”! Above all, never regret having sold too early or too late, because the stock market would then turn into a “temple of regrets” … Conversely, learning from your mistakes is an essential rule so as not to reproduce them over and over again to come up.
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