Choosing an approach
Some people jump into the sharemarket with the idea that they are out to ‘make money’. They buy a little of this, a little of that, all the while hoping they have bought shares which might go up. So what’s wrong with that? Well, it confuses the end result with how to get there.
The best investors have an approach, or method, they use to help them succeed. We’re sure you’ve probably heard the old cliché ‘Failing to plan is planning to fail’—it’s not much different if you’re a novice investor. So how do you start to plan?
First, you need to select an investment approach that suits your objectives and your character. The trouble is that there are almost as many different approaches to the sharemarket as there are investors themselves. To be successful, you’ll need to choose one that suits your mentality and objectives.
For example, if you’re retired, or close to it, you’ll probably prefer a generally conservative, long-term strategy that delivers you dividend income first and foremost. By contrast, if you’re young and single, you might adopt a more aggressive strategy focused on buying fast-growing, small companies for maximum returns.
So you need to select an investing approach that’s right for you. Just make sure you know what you’re getting yourself into. Plenty of investors start off with an aggressive strategy that really isn’t suited to their personality, end up losing money, only then to find a slow, steadier approach helps them make up the losses they made when they were less experienced.
