The Importance of Monitoring Your Investments
What is My Stock Secret? In my experience, investors often do not monitor their investments as closely as they should. Many rely on the advice of stock brokers and bankers without ever following up, assuming these professionals have superior knowledge and their best interests at heart. However, this is not always the case. Bankers and stock brokers may have their own interests in mind, which sometimes align with yours and sometimes do not. Additionally, relying on social influencers, X posts, YouTube, and TikTok influencers for investment decisions is risky and unreliable. While it is important to invest, failing to understand how your money is being invested and the criteria used by your broker or any other source increases your risk. Always do your own research and make informed decisions based on thorough understanding and analysis.
Understanding the Motives of Financial Advisors
It’s not that bankers will deliberately work against you, but they are trained to suggest investments that benefit the banks, and these benefits often come at the expense of your share. Stock brokers and bankers frequently promote the latest popular products or those aligned with current corporate strategies. They might advise you to buy high-performing mutual funds or trending stocks, which can yield returns but often fall short of the substantial gains promised.
My Stock Secret: The Long-Term Investment Strategy
Banks and brokers advocate for a long-term investment strategy, suggesting that although your investments may not perform well initially, they will yield better results in the long run. While I agree with the long-term approach, my personal experience has been mixed. For instance, in 2013, my bank attributed the poor performance of my mutual funds to the economic recovery being incomplete. Despite this, the Dow Jones was at record highs. This discrepancy led me to question why my investments were still underperforming, revealing the importance of closely monitoring and understanding your investments.
My Stock Secret: Empowering You to Make Informed Decisions
The goal of My Stock Secret is not to tell you how to invest your money but to assist you in the decision-making process. We are not licensed to provide buying advice, nor do we offer specific stock recommendations. Our focus is on empowering you to take control of your investments.
A Conservative Approach to Building Wealth
Our approach may surprise you, as it is essentially advice you’ve likely heard throughout your life but perhaps haven’t fully considered.
My investment strategy is not about getting rich quick but about building wealth over time using the safest methods available. There is a significant difference between the two. While get-rich-quick schemes occasionally succeed, most people who follow this high-risk strategy end up losing everything due to poor decisions made in the hope of striking it rich with a single investment. For every successful high-risk decision, there are hundreds of poor ones. It simply isn’t worth the risk.
By following my guidelines and developing a few more of your own using a similar thought process, you will see your money grow exponentially.
The Market Trends Upward Over Time
Generally speaking, the market always grows. It is subject to fluctuations, but overall, the market trends upward. Based on this, investing in the stock market is a sound strategy. To achieve decent returns, you need to be actively invested rather than sitting on the sidelines. Moreover, by adhering to solid rules, you can outperform the market. Regardless of market conditions, making smart decisions will help keep your money safe and growing.
My Stock Secret: The Importance of Research
The market is only dangerous if you do not do your research and proceed with no knowledge or the use of “gut” feelings. Researching a stock before you buy will prevent you from making poor decisions. Do not fall for the hype of a “new” stock on the market. Often times they do not perform as expected. See Facebook for example. Before doing research on stocks to purchase you need to develop some rules as to how you are going to make your buying decisions. I will let you know mine a little later on. While doing your research adhere to these rules that you develop to help prevent you from making that poor decision. We will outline some stock buying rules that we have developed. We will also show you some tools we use to make our stock buying decisions.
Making Your Money Work for You
The money you save needs to be working for you. A savings account does not have the earning potential of the stock market. Is it safer? Sure, but the growth potential is limited. Do you think Warren Buffett or Donald Trump rely on a savings account? The rich stay rich by making their money earn more money and by saving more than they spend. It is a simple concept but one that needs repeating.
The Power of Long-Term Investments
The longer your money is in the market, the more you will earn. Simplistic but true. If you have a $1000 in the market for 30 years and a $1000 in the market for 1 year, which one will be worth more? This is assuming that you have followed the investment rules of course.
My Stock Secret: Basic Rules for Smart Investing
Here are some basic rules that I use when investing. I have found that these rules keep me from making poor decisions. Use as many of these rules as you see fit but keep in mind the rules shown here have been developed to make money over the long run. I want to protect my money once I invest it as much as I can.
1. Diversify Your Investments
Invest in as many different market sectors as you can afford. Do not put all of your resources into one stock. The market will fluctuate, so being diversified will allow you some stability as it is very rare when all sectors are down at the same time.
2. Invest in Quality Companies
Companies I invest in need to meet the following criteria:
- Long-Term Presence: The business has been on the stock exchange for more than 30 years.
- Consistent Dividends: They always pay dividends, and the dividend percentage never decreases. The dividend should be realistic—too high a dividend cannot be sustainable and may signal trouble, while too low isn’t worth the investment. I prefer a price-to-earnings ratio around 10-20.
- Strong Management: The business should not be managed by one individual or a private owner but by a board, as a group of decision-makers often leads to better outcomes for shareholders.
- Market Leadership: The business must be a major player in its market. Given a choice between a $500 million company and a $150 billion company, I typically choose the larger one unless the smaller company shows extraordinary potential through research.
- Manageable Debt: Business debt must be manageable, and long-term debt should not be excessive. Short-term debt is usually acceptable, but long-term debt requires further scrutiny to ensure it’s for a beneficial purpose, such as acquiring a major competitor.
- International Presence: Businesses that have expanded beyond one country, and even better, beyond one continent, are more likely to succeed during economic downturns.
What is My Stock Secret you ask?
The real secret behind successful investing lies in a combination of time, discipline, and informed decision-making. Here’s a summary of the key principles that form the foundation of My Stock Secret:
- Time in the Market: The longer your money is invested in the stock market, the more potential it has to grow. Compounding returns over years and decades can significantly increase your wealth.
- Creating Rules and Goals: Establishing clear investment rules and goals helps you make consistent and rational decisions. These guidelines will steer you away from impulsive moves and towards sound investments.
- Selecting High-Quality Companies: Invest in businesses with a strong track record, consistent dividends, solid management, market leadership, manageable debt, and an international presence. These companies are more likely to provide stable and long-term growth.
I know this might not be the quick-fix solution you were expecting, but I hope I have convinced you to view your money differently. You have the ability to make excellent choices that can generate long-term wealth. By investing in your knowledge, your confidence will grow, and you will be better equipped to navigate the complexities of the stock market.
Remember, the goal is not to make quick profits but to build wealth steadily and securely
Happy investing!