Why do some investors always make money and some lose?


Tips to initiate smart money investment 

Investing in the stock market is not a chance of luck. It requires hard work and expertise. Despite efforts, some people lose money, while some make a fortune out of it. Here is why there is a huge difference in the returns of people investing in the stock market.

Why do some people lose money in the stock market? 

Most people lose money in the stock market because they do not prepare thoroughly to invest or find the right professionals who have mastered investing. People who lose in the stock market usually do not know what to buy, and how long they would own it. Without adequate information, selling becomes tough, thereby reducing the chances of earning profit. In addition to this, people who do not diversify their portfolios have a higher risk of facing loss compared with people who have different types of stocks.

Why do some people earn money in the stock market? 

People with realistic expectations and knowledge always make money in the bull market. Experience matters; it is essential to start investing early to gain profit. The lure of money can make people rush into buying stocks without giving thought to it. Investing goes beyond just the market price; it requires research and knowledge. There is no magic formula to achieve success in the stock market, but the following are some tips that can help increase the chances of profit:

Try to avoid herd mentality: One must practice the fundamental method of investing; by giving less importance to the stock’s price and more to the company’s reliability. People who are new to investing usually follow what their acquaintances do and end up in loss. 

Never try to time the stock market: People who try to estimate the top and bottom price of any stock have low rates of success in the stock market. By trying to implement this method, one can even risk losing their hard-earned money in no time. 

Have a disciplined approach: High volatility in the stock market, people often lose money. To achieve long-term gain, one must have a systematic approach for investing. The stock market is always rushing; it is essential to keep calm and disciplined. 

Always have realistic goals: Unrealistic goals from an investment will only make one take wrong decisions. Always have achievable goals and never expect the same return from the stock market; every investment is different.  

Never let your emotions influence your judgment: People have the lure to make money, making them greedy, and on the contrary, some people are too scared to decide at the right time. In the bull market, there is no scope of emotion, especially not greed and fear.

Although many people have made it big in the stock market, trading is not easy. It requires knowledge and patience. Investing is essential for a secure future, but since the risk is enormous, it is beneficial to consult a wealth manager, like Client First Asia who gives financial and risk management advice & excels in managing portfolios for their clients from around the world.