Methods 1: Familiar with different investment channels.
1。 Understand stocks.
This is what most people think of as "investment". Simply put, stocks are the ownership shares of listed companies. Stocks represent what a company owns-its assets and profits. When you buy shares in a company, you become a partial owner of the company. If the company is really good and the stock value rises, you may get a high dividend. If the company is not well managed, its shares will depreciate.
The value of stocks comes from the public's opinion. This means that the stock price is "considered" to be valuable, not "actual" value. In the stock world, there is no "reality". People think that the value of a stock is its actual value.
When more and more people want to buy rather than sell, the stock price goes up. When the stock price falls, more people want to sell rather than buy. To sell stocks, you always need to find a buyer who is willing to buy at the listing price. To buy stocks, you always need to buy from people who sell stocks.
"Stock" can have many different meanings. For example, penny stocks are stocks that cost only a few cents (most stocks are priced in dollars). Stocks can also be bundled into an index, such as Dow Jones, which is a collection of 30 high-end stocks. Buying and selling fairy stocks, individual stocks or indexes is very different, even if you are surrounded by stocks.
2。 Understand bonds.
Bonds are the issuance of debts, similar to IOUs. When you buy bonds, you basically lend money to an entity, which is called the principal. The entity agrees to repay the principal plus annual interest to you during the loan period. This is why bonds always have a certain life (that is, 10 bonds will be repaid after ten years) and a certain interest.
Here is an example. You bought a 5-year 10000 municipal bond with an interest rate of 2.35%. You lent your hard-earned 10000 to the city government. The municipal authorities pay 2.35% of 65,438+00,000 yen, or $235, every year. After five years, the municipal government will repay your principal 10000. Generally speaking, you have recovered the principal plus interest (5×235) 1 175 USD.
Generally speaking, the longer the maturity of a bond, the higher the interest rate. If you only borrow for one year, you may not get much interest, because one year is a relatively short time. If you plan to borrow money and don't expect to recover it in more than ten years, you'd better make up for the risk, and the interest rate will rise. This is what we often say in investment: the higher the risk, the higher the return (as it should be).
3。 Understand the commodity market.
When you invest in stocks or bonds, you invest in meaning, not essence. You get a worthless piece of paper, but its promise is valuable. But commodity investment is not the case. A commodity is something that meets demand, just like pork belly (bacon), coffee beans or electricity. The commodity itself is often valuable because people need it and use it.
People often trade commodities by buying and selling futures. This noun sounds complicated, but it is actually easier than it sounds. Futures is just an agreement to buy or sell a commodity at a certain price in the future.
Futures were originally used by farmers to hedge. The following is the work away from futures. Farmer Joe grows avocados. But the price of avocado fluctuates greatly, which means that the price often rises or falls. At the beginning of the season, the wholesale price of avocado is $4 per bushel. If farmer Joe has a bumper harvest of avocados, but the price drops to $2 per bushel in April, Joe may lose a lot of money.
Here's what Joe did. He sells futures contracts to others. According to the contract, the buyer agreed to buy all Joe's avocados at a price of $4 per bushel in April.
In this way, Joe has insurance. If the price of avocado goes up, he will be fine, because he can sell it at the usual market price. If the price of avocado drops to $2, he can also sell it to buyers for $4, earning much more than his competitors.
A futures buyer always wants the commodity price to rise (more than the commodity price he pays for futures), so that he can lock in the low price. The seller hopes that the price of the goods can be reduced. He can buy goods at a lower (market) price and then sell them to the buyer at a higher price than the market.
4。 Know a little about real estate investment.
Investing in real estate may be risky, but the profits are very rich. There are many different ways to invest in real estate. You can buy a house as a landlord. What you earn is the difference between the mortgage you pay and the rent paid by the tenant. You can also decorate the house. You buy the house that needs to be renovated, then repair it and sell it as soon as possible. You can even invest in a complex mortgage portfolio (CMOS or CDO). Ownership can be a very profitable asset.
Investing in real estate also has great risks. Until recently, people thought that houses would only appreciate in value. They bought houses at high prices, and when the bubble burst, they saw the value of their property plummet. Just like stocks and bonds, the market can make people rich overnight or bankrupt in the blink of an eye.
Method 2: Grasp the foundation of investment.
1。 Buy undervalued assets (buy low and sell high).
If you are talking about assets such as stocks, you want to buy them at a low price and sell them at a high price. If you buy 1 00 shares on June 65438+1October1day at a price of $5 per share and sell the same shares on February 65438+February 3 1 day at a price of $7.25, then you earn $225. This amount seems insignificant, but when there are hundreds or even thousands of shares in the trading room, the money earned has been increasing.
How do you know whether a stock is undervalued? You need to know the company thoroughly-its expected return, P/E ratio and profitability-instead of just knowing a little, making decisions based on a ratio or the instantaneous decline of the stock price. Use your critical thinking ability and your common sense to analyze whether a stock is undervalued.
Ask yourself some basic questions. What is the prospect of this company in the market? Can it be a little darker or better? Who are the competitors of this company and what are their prospects? How will this company make money in the future? These should help you better understand whether a company's stock is undervalued or overvalued.
2。 Investment. You know this company.
Most of us may have above-average professional knowledge in at least one industry. Why not use this professional knowledge? Invest in companies and industries you know, because you know more about the income model and prospects. Of course, don't put all your eggs in one basket. This is stupid and dangerous. However, investing in an industry that you know very well will increase your chances of success.
3。 Don't buy because of hope, but sell because of fear.
When investing, we are easily tempted to follow suit. We are often troubled by what others do and take it for granted that these people know what they are saying. Then we buy stocks when "others" buy them and sell them when "others" sell them. It's easy for us to do this. Unfortunately, it may also be the easiest to lose money. Invest in companies you know and trust-reject other people's propaganda-and you'll be fine.
When you buy a stock that everyone buys, you may buy a stock with high quality and high price. When the market corrects itself, you may eventually need to buy high and sell low-just the opposite of what you want. Just because everyone wants a stock to go up, that stock will go up. This idea is stupid.
When you sell stocks that everyone is selling, the stocks you sell may be more valuable than your money. When the market corrects itself, you buy high and sell low. Fear of losing money is often a sad reason for you to sell stocks.
4。 Understand the impact of bond interest rates.
There is an inverse relationship between bonds and interest rates. When interest rates rise, bond prices fall. When interest rates fall, bond prices rise. Why is this?
The bond interest rate is closely related to the current market interest rate. Suppose you buy a bond with an interest rate of 3%. If the interest rate rises to 4%, then you can't get rid of the 3% interest rate. If people can buy bonds with 4% interest from others, not many people will buy you. For this reason, you need to lower the price of bonds-almost to give people money to buy bonds that you are not so good at.
5。 Diversification, diversification, diversification.
Portfolio diversification is one of the most important things, because it can reduce risks. Think about it, if you invest $5 in 20 different companies, if you want to lose all your money, you need all 20 companies to go bankrupt; If you invest $ 100 in a company, you will lose the money as long as the company goes bankrupt. Diversification can hedge risks, so you don't have to lose a lot of money when a company is underperforming.
Invest in different types of assets and debts to diversify your portfolio. Ideally, your portfolio should be a good combination of stocks, bonds, commodities and other investments. Usually when one kind of investment returns are poor, the other kind will be good.
6。 Look at investment in the long run.
Choose a stable and huge investment and hold it for a long time. Finally, put your money in the stock market for a long time, instead of being a day trader, buying and selling dozens or even hundreds of times a day. Why?
Accumulation of brokerage commission. Every time you buy or sell stocks, your agent is actually a middleman, and you need to charge a commission when connecting you with other sellers or buyers. These expenses will really reduce your profits and increase your losses. Don't pick up sesame seeds and lose watermelon.
It is almost impossible to predict big gains and losses. When the stock market is good, it is possible to make a lot of money. However, it is almost impossible to predict those days. If you leave your money in the stock market, you will automatically benefit from these bull markets. If you don't do this, you must foresee when there will be a bull market. It's not impossible, but impossible, just like winning the lottery.
Generally speaking, the stock market will rise. From 1900 to 2000, the average annual return rate of the stock market was 10.4%. This is huge. Here are more statistics. If you invest 1900 USD, you will get a net profit of 1 98 billion USD in 2000. If there is a return of 15%, it will go from 15000 to1000 in just 30 years. In the long run, not in the short term. If you are worried about the small estimate in this process, you may mistake the forest for a tree.
7。 Know how to sell short.
Compared with betting on the rise of securities prices, "short selling" means betting on the fall of prices. If you short a stock (or bond, or currency), borrow a certain amount of this stock as if you had already bought it. Then, you wait for the stock price to fall. If it really falls, you will "earn", that is to say, you can buy this stock at the current price and then return it at the current price. The difference between the amount paid at the beginning and the end of the period is your profit.
Short selling may be risky, but it can also be another form of insurance. If you take short selling as a form of speculation, be prepared to suffer-stock prices often rise, and you must buy stocks at a "higher" price to repay the money you borrowed before. On the other hand, if you use short selling to hedge your losses, it is actually a good form of insurance.
Method 3: Try to invest.