I recently mentioned how much more attention my “non-investor” friends pay to their portfolios when the markets are good, as they have been lately.Â What is most disturbing about this is the perception that it gives others about jumping into the stock market.
Lately, I’ve been hearing stories of people simply plunging into the market with their life savings after hearing how their friend doubled his money over the past 18 months.Â While this can have good results, the individual doesn’t really understand what they are investing in.
Investing this way can be a double edged sword.Â You could take the “hot tip” and invest right now and maybe find out that the tip was bad and lose your capital. On the other hand, you could take the time to do your due diligence and find out that the investment is a good one and risk losing an opportunity.
What would you rather do?
The great thing about investing is that new opportunities come long all the time, you just have to know where to look for them! Â I’m pretty sure that you know that the answer to the question should be to stand back and take a good long look at the investment opportunity before plunging in.
One of the keys to investing is to protect your capital because it is your primary tool for building wealth.Â Â If you lose your capital, the journey to financial freedom just got a lot longer!