Playing with stocks – Are you playing the stock market now?
Our economy is somewhat dismal and has been for quite a few years, but there are many good stocks to invest in right now. Here are a few tips on how to play in the stock market.
1. Always apply dollar-cost averaging – what this means is to not sell your stocks when the market drops, instead you must take advantage of the dips and buy additional shares while the price is low. It is a good practice to buy low and sell high.
It takes nerves, but if you think that you do not have what it takes, then you need to understand the following solution – dollar-cost averaging. Make regular investments over time so as to be buying stocks when the price is in motion – NOT when the stock has reached its peak. This can provide great protection for times when the markets are down, click here to see how.
2. Fluff Up Your Cash Cushion – Create a cash cushion so that you may survive when times are tough. Experts recommend that you have approximately a half years worth of living expenses at your disposal (a cash cushion) and by having this cash cushion, you can keep your stocks in your portfolio where they can continue to make money for you. No cash cushion means that you would run the risk of selling them for less than what you paid for them.
3. Balance Your Trading – By finding the right balance in your trading, ie: not overly aggressive or more conservative than is necessary is a good way to achieve success and reach your financial goals. The best balance is to invest in cash and bonds (not too heavily) as well as hot stocks and sectors. Keeping your portfolio balanced can ensure safety.
4. Turn Your IRA to a Roth – By turning your IRA into a Roth IRA you can eliminate the tax that you pay on the income that it generates. For a more detailed explanation on how a Roth IRA can save you money, click here.
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