As an active investor, you want to be able to change every controllable variable so you maximize your upside and cut your losses fast whenever the market takes a turn for the worst. While the market is generally unpredictable, investors tend to gain in the long term. Knowing this, you should take a blue sky approach and play the game for the long term. As you gain more control over your investment platforms and process , take care not to make snap decisions in pursuit of quick wins that might hurt you in the long run.
Use Motif investing
Motif investing is a platform that was specifically created to give investors like you more control over their investments. The brain behind the platform is a former Microsoft executive called Hardeep Walia.
The concept revolves around investors choosing to invest in motifs which are basically preselected themes made up of stocks sharing something in common such as a similar industry. You are however not limited to themes as you can still buy individual stocks.
The platform is pretty well thought out and you get to have almost 150 themes to choose from. There is no minimum required balance and you can start almost immediately with the little money you have.
Assess Your Risk Profile
One of the first steps to being an intelligent investor is protecting your downside and ensuring that you don’t take huge losses. The easiest way to do this if you are just starting out is avoiding or minimizing risky positions and placing bets that are relatively easy to win.
The markets can be volatile and you can tremendously reduce risk by diversifying your portfolio and taking a really methodological and deliberate approach to asset allocation. Investing all your money in the stock market is not the wisest thing to do. Take steps to reduce your exposure by making some investments in other sectors of the economy.
Max Out Your 401(k)
Starting to secure your retirement early in your career will pay huge dividends in future. This is one of the most basic concepts but it is amazing just how many people ignore it outright. If your employer matches your 401 (k) contributions, it is absolutely essential that you put in as much as possible to fully take advantage of the opportunity.
Further, having higher contributions than average is a good way to cultivate both a savings and investing habit especially if you are young.
Reduce Investment Fees
Have you ever bothered to look at how much you pay in investment fees? You might be paying more than you should just because you’ve never bothered to evaluate the options available to you. According to NerdWallet, just a 1% fee could cost you $590,000 in returns over a 40 year period. It is, therefore, important that you find the unwarranted fees you are currently paying and get rid of them as fast as possible.
For the millionaires among us, “fund of fund” hedge funds are generally not a good choice. You will incur double fees. The fund’s management will charge you 1% and then the other funds in the equation will take anywhere from 1% to 2%. Your fees, right out of the gate, are about 3% and the likelihood that you’ll beat an un-managed S&P index is not even high.
As a smart investor, you want to take advantage of all the things you can control so you stack the odds in your favor. Little wins stacked over time can lead to disproportionate results in future. Take more control of your investments to ensure that you are in the driver’s seat of your financial situation.