Image by: Philippe Put
By Tony Melino
Wait, isn’t the objective of this website to help men become successful in every facet of their life? Yes, that is why I’m talking about controlling your investment losses. It’s smart to plan for the future with optimism but it’s also smart to keep your mind in the realm of reality.
When it comes to investments; you will win some and you will lose some. That’s just the name of the game. But if you can control your losses, wouldn’t you feel better about that loss instead of something more detrimental?
Let’s go through some tips on how to do this.
How Can I Control My Losses?
The first thing you need to know about investments are that most investors will have a Profit/Loss Plan. What is a Profit/Loss Plan? It’s a plan that is derived to make sure you don’t lose everything you have and everything your family has.
It’s a plan investors use that will limit the amount of potential gain or loss with each stock. Containing your losses is a very strategic plan and a basic part of investing. Most just overlook this plan.
1. High Risk or Low Risk?
The first thing you need to know about yourself as an investor is whether you have a high risk tolerance or a low risk tolerance. The reason you need to know this is because you may take a hit of 50% – which would mean you would have to double your money until you break even.
If you aren’t willing to let the stock play out in its entirety and pull out at the first sign of trouble; then you have a very low risk tolerance. If that’s the case; then you probably shouldn’t be risking your money in the stock market in the first place.
But it’s not impossible to make money if you are on the low risk tolerance side of the spectrum. Just remember that stocks will rise and fall; you just have to let them play out before taking the next step.
2. Stop-Loss Orders
A lot of investors use this kind of contract to make sure they get the most bang for their buck. A Stop-Loss Order is defined as a contract investors use where their broker will buy or sell a stock when it reaches a certain price.
3. Pick The Right Company
The last tip I’m going to talk to you about is just because you hold onto a stock for an extended period of time doesn’t mean that you are going to make money. You may make money, you may break even, or you may even lose your investment.
If you have a low risk tolerance; invest in a low risk company. You won’t be able to double your money with a low risk company that grows steadily by 20% annually.
Use these tips to begin your journey into the world of investments. The more you get into it; the more you should consider hiring a broker. They definitely have advice the normal adult may not be able to tell you and they definitely understand the industry more than the average adult.