Every investor wants to turn thousands into millions. Making this type of gain in the stock market IS certainly possibly. But it still takes knowledge, skills, and the right mindset to accomplish such a feat. Instead of going after this accomplishment on your own, it’s best to look at what successful people have done before you.
So today, we’ve listed 7 rules that investors use to turn thousands into millions.
Rule 1. Invest For The Long Term – The Best Way to Turn Thousands into Millions
Even when day trading, long term investment strategies are vital for success. It’s not just the strategies either, it’s a whole mindset. When stuck on the idea of getting rich quickly, people often act as if making money on stocks is a race, instead of a journey. Some of the world’s best investors, such as Warren Buffett say their success was founded on long term strategies.
Rule 2. Invest In Brands And Businesses You Believe In
When you’re looking at investments, don’t jump on trends that are short lived. Instead, focus on brands and businesses that you believe in. One easy way of doing this is to act as if you’re buying the business (because you kind of are!).
Rule 3. Break The Rules
While there are always companies that are considered “safe” for investments, if you’re really trying to get a high return on your money, take some risks. A small forward thinking company can bring you higher returns than a large stable company. Higher returns will bring you much closer to your goals than the “safe” investments.
Rule 4. Cut Your Losses
It might sounds easy, but for many beginning investors, it’s hard to cut your losses. After all, you just spent so much time learning about a company, becoming convinced it’s going to do well and then, watching that prized stock drop in value. Instead of holding onto it, convinced that at some point it will return to its former glory, take a deep breath and cut your losses. Acknowledge that you made a mistake, ask yourself where you went wrong, and try to learn from the experience.
While you can set your own numbers in advance of investing in stocks, the general rule of thumb is to sell stocks when their down 7% from the purchase price. This will help you avoid a drastic plummet impossible to come back from. A 7% loss can be easily made up in your next stock purchase, but if you let your stock fall too low, you won’t be able to recoup your money.
Rule 5. Treat Trading Like A Business
While there are risks to investing, you should still treat it like a business. Learn about the stock market and sectors of the stock market. Create a game plan for how you’re going to go about investing and create rules for yourself that you’ll stick by. If you have the money and time to invest in a mentor, do so!
Whatever you do, don’t jump from strategy to strategy or write off mistakes as “no big deal”. Master a strategy, learn one thing well, and stick to your planning.
Rule 6. Only Make Risks You Can Afford To Make
Perhaps the biggest mistake a new investor can make, is investing money they really can’t afford to invest on the premise that they’re going to get rich quick. You’ve probably heard this a million times, but if you can’t afford to lose it, don’t invest it. When you see big players talking about their success, it’s tempting to want to throw caution to the wind, but remember that investing is a long-term strategy. If you want to safely make cuts to your budget to invest, try to cut out some of the little luxuries, like your morning coffee. Yes, morning coffee is amazing, but making it at home will save you a few dollars that you can put into the stock market.
Rule 7. Analyze The Market
One rookie mistake is to focus on individual stocks instead of market sectors and the market at large. Understanding the market as a whole and the market sectors you plan on investing in will help you avoid huge losses. For instance, the marijuana market was on the rise for quite some time. However, when new marijuana laws were put into place, stocks such as the CBDS stock, started falling drastically. Investors who understand the market and market sector would have had the best chance of minimizing damages, compared to those who were just watching the individual stocks with no understanding of the industry.
While investing in the stock market isn’t necessarily an easy way to make money, it very well might be the easiest way to make millions from thousands. This is especially true, if you set yourself up for success by following these 7 investment rules.