With the Bay and Wall Street trading on record territory, and certain Goofy stocks like NVIDIA making headlines for its share price rally, it’s tempting for investors, especially those who are just starting out on a trip and may not have a lot of money to invest directly in Bats, which is wanted to join the action.
However, before worrying about missing out on your fears, experts recommend taking the time to ask why you are investing in the company. “Many investors are hyped,” said Ryan Gubic, a certified financial planner and founder of MRG Wealth Management. “When you have high performance or winning investments, they have gone from potential low to high.”
Intentional investment, not impulse
But investing goes beyond the fear of missing out on returns. Experts say it’s more about the individual’s position in financial travel, including their goals and time frames, and linking it with investment decisions.
Gubic said young investors need to consider their experience in investment and their time to commit to market and economic analysis. He advised them to talk to the financial advisor to be more clear about their goals, risk tolerance and needs that can be mapped in the overall financial plan.
If investors don’t do their homework on what they actually invest in, then the sales of stocks can quickly turn into speculative betting, Gubic said. “Are you just pursuing rewards, or are you actually having a strategy and process?” he asked.
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Recording highs comes with real risks
When individual stocks trade on record territory, they also have risks. “What are you willing to lose? How will this affect you over the next five years, 10 and 30 years?” Guby said. “It’s really true to yourself: are you doing speculative gambling or are you investing in a systematic way?”
Mia Karmelic, executive consultant for IG Wealth Management, said that while friends may often talk about their investment victory, few people discuss their losses publicly. “When they lose money, they don’t always talk about it,” she said. “I think it’s important, too.”
Despite the emergence of market volatility from trade-related volatility earlier this year, a large amount of investment has left many investors on the edge. But the market swept and played several new highs in the following months.
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“Callbacks are normal, they happen every year,” Karmelic said. “The market recovers and continues to reach new highs.”
She said investors should not be overly fixed in the market or where individual stocks are located, but should focus on the long term. “I recommend investing in a diversified portfolio (ETF, mutual funds) without a lot of savings to invest in,” she said.
Diversity is your best defense
Young investors usually start with a small amount of money and sometimes, they may take more risks to find returns.
“It’s hard to diversify a wide variety of stock portfolios when there is no large amount of capital investment,” Karmelic said. Instead, she recommends investing regularly. “Only you go into the market yourself, capture these different prices, and in the long run, you’ll do a great job.”
But that doesn’t mean putting your money into working on stocks that trade at all-time highest levels. “Of course there is certainly room for some stocks that always have highs, as they may continue to reach new highs,” Karmelic said.
But it’s important to protect your portfolio from significant volatility, she said.
“It’s important to invest in a diversified stock portfolio that is not only in specific countries,” Karmelic said. “I think if investors only come into contact with three or four companies, they will definitely feel volatility.”
Even then, if an investor puts his heart on altitude stocks, it only accounts for a small part of its portfolio. “When I look at a lot of clients, individuals can hold about 1-2%, sometimes a little less,” Gubic said.
