Many people who want to invest their money end up doing gambling! When it comes to investing, a lot of people are doing it wrong. In fact, many don’t understand the fact that they are gambling instead of investing their money sensibly. When it comes to selling or buying an asset, you should know why you want to do that. Many people do this because the price of the asset is rising. This is not a good reason as the price may stop rising after a certain point. To make sure that, you need to identify what drives the price of the asset. The problem with a lot of new investors is that they want to make a quick buck. And they follow a friend or relative who has already invested somewhere. They blindly follow their example without checking the pros and cons of their choice. Well, such kind of an investment is called gambling. We can’t really call it investing since you have made the investment based on the hope. Here, you haven’t made a decision based on the analysis. You shouldn’t make an investment without analyzing the pros and cons.
My friends are into it
Well, when it comes to most novice investors, ‘my friends are into it’ is the main reasoning for their investment. They don’t think beyond this. Is it a good strategy? It is not!
- Your friends and relatives may not be the smartest investors around.
- Otherwise, find out how successful they are in this before you make an investment.
- The people you look up to might be pure gamblers.
- Keeping that in mind, it is not a smart idea to follow their example.
- You should better listen to a successful investor who knows do’s and don’ts in investing.
The example of gold
Let’s just examine the example of gold here. A few years ago, the value of gold was skyrocketing. In fact, the value of gold is still at a high. However, gold has come down from the peak it reached a long time ago. Many jumped at the opportunity and bought so much gold when it was really costly. Well, I can say without hesitation that many lost money with this move. You should invest only after finding out the factors that drive the price of gold. Now that the price of gold is not increasing sharply anymore, those who have invested heavily in it are paying the price of their gambling. If you are looking for Personal Investing Decisions, Read The Article Given Here.
What drives the price?
It is really important to find what drives the price of the asset. This is applicable to all sorts of investments it selling, buying, selling short etc. Make it a habit to predict the factors that are going to drive the price. You may be wrong at times and you may end up losing money. But you may be right as well. The point here is that you will nonetheless get better at identifying the factors that influence the price. With experience, you will make better decisions. When it comes to investment, it is really important to make the right move. As a beginner, you might make mistakes, but it is part of the deal.