How to Make $1,000,000 From Stock Market – 5 Tips From Successful Investor
Posted by admin | Posted in Stock Tips | Posted on 31-05-2010-05-2008
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Formulate Specific Goals
You must have heard this many times before but have you done it yourself? In many cases I find most beginners unable to design specific investment goals. “Want to be Rich in 3 Years” is not good enough. You must specify how much money you need, what kind of return you expect and how long you can wait.
Bottom-line, you must have goals that are specific, measurable, attainable, realistic and timely. Otherwise, you’ll easily lose sight along the way.
Analyze Your Risk Tolerance
If you think that nobody understands yourself than you do, think again. More importantly, people tend to be emotional than realistic when it comes to money. That is why you can easily notice significant price volatility in stock market as a result of human’s feeling of over-pessimistic or over-optimistic.
There is nothing wrong with your emotional feeling. What matter is how you can control your emotion should anything happen. You can do this by first objectively evaluate your risk tolerance through various questionnaires. Compile all of the results and summarize what is your investing personality.
Identify the Best Strategy
Once you’d discovered your own investing preferences, start digging which investing strategies suit your personality. Stock investing strategy that suits my personality might not be working very well for you. Thus, it is your job (and not your financial advisor) to look for those investment strategies; namely short-selling, swing trading and momentum investing.
At this point of time, you need to do a lot of research. You might have to spend hundreds or even thousands of dollars buying books and hours of reading them. If you think it is a waste of money, probably investing is something you should consider outsourcing straightaway. Even then, you still need to know where your money will be invested.
Develop Long Term Plan
By now you should have definite idea on how to invest your money. At least, you must be aware of various financial instruments, stock investing strategies and how all of them are related one to another. Only then you can develop effective long term stock investing plan.
Let’s start with elements that you should include in your definitive long term plan.
First of all, you must have deep thought on the asset allocation strategy. Secondly, finalize which strategies you intend to pursue. Last but not least, prepare enough cash for emergency funding should significant opportunity arise. I personally prefer 40 to 60 per cent for long term stock investing, 20 to 35 per cent for momentum investing and 10 to 15 per cent for some speculative trading.
There is no right and wrong decision here. As long as it fits your investing personality, you should be fine.
Follow the Plan and Track Progress
Above all, you must implement what you should have planned before. Otherwise, you are putting your efforts to waste. And most importantly, track how your investment performs at least on half-yearly basis. From the performance review, you may (or may not) want to re-strategise your stock investment portfolio accordingly.
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