The 2020 pandemic hit many companies hard, while other companies took it as a chance to grow, seemingly unaffected by the state of the world around them. NVIDIA (NASDAQ:NVDA) came out as one of those thriving businesses and achieved gains of 122% in 2020. The company’s graphics processing units (GPUs) were present and needed for trends that accelerated exponentially due to the pandemic, boost...
The world of investments is an extraordinary one. Not only is it one of the best ways overall to produce remarkable wealth, but it is also a financial venture with which everybody can quickly become familiar.
Still, many people opt not to involve themselves with these activities, as they feel that their current work schedule won’t allow them to manage any investment successfully. In a way, the most successful investors should be those who work on their investments full time, right?
Not really. Even relatively inactive investors can make highly successful investments of their own, amounting to a more-than-decent monetary return. However, anyone looking to invest this way is still required to make properly strategized decisions at all times.
Here are three tips that will help you manage part-time investments.
Do not go exclusively for the headlines
Making a successful investment is a process that involves lots of profound research. Lucky for us, we can now find helpful information basically everywhere. Keeping that in mind, probably the most common one people base themselves on would be any news broadcast focusing on the stock market.
However, there’s an issue that profoundly affects the legitimacy of this source.
News broadcasters usually give an exclusive spotlight to the most significant events of the day, which they tend to overestimate for showmanship. As history has shown many times already, any financial choice based on just one instance of good performance can rarely ever reach a long-lasting streak of success.
Take Nikola’s case as an example.
Last year, the electric vehicle manufacturer saw an increase in share prices of up to 1000%. Of course, broadcasters then started selling it as the market’s next Tesla. Sadly, said increase lasted up to two days, after which the company returned to their original numbers. To make matters worse, the company could not reach those numbers again for the remainder of the year.
As expected, many people saw this opportunity as a chance for a significant investment. Unfortunately, with its massive decrease, said investment alone led to substantial losses.
In essence, do not give any significant weight to the main headlines only. Vary your sources and provide a deeper look to any broadcast that’s not big enough to become it. Even the company behind the least impressive news report might have a better prospect for stable growth than the biggest one of the day.
Look for companies capable of evolving
All companies start with decent prospects for long-term evolution, but not all of them will be capable of doing so in the end or maintaining it for extremely long periods. That’s a fact.
Take Eastman Kodak, for example. Once the leading company in camera and film technologies, it refused to shift its efforts towards digital photography at its beginnings in the industry.
As we all know, the practicality of these new technologies then became a staple of the average person’s photography-related activities. In due time, film technology was a thing of the past.
Because it failed to embrace this new reality, Eastman Kodak filed for bankruptcy by 2012.
Compare it to a household name like Google, which saw several opportunities for expansion in businesses: cloud computing platforms, mobile device operating systems and entertainment-based mobile applications.
More than newer technologies and services, the company saw these ventures as an expansion of their already existing services, which was a key factor in their ability to grow successfully.
Optimize your mutual fund investments
The thing about most actively managed funds is that, depending on which kind of fund you’re following, you face decent chances of your investment underperforming overall.
Take the S&P 500’s most recent data collection, which shows that 93% of its actively managed large-cap funds have been trailing for the past 20 years.
However, the same data also showed that active small-cap and mid-cap funds had a higher success rate than large-cap funds. The same applies to international and emerging market funds.
Suppose you were to be interested in making mutual fund investments. In that case, you’d very likely be at your best if you were to open yourself to the option of investing in relatively more minor opportunities. Not all suitable investments come in the form of large-cap funds.
Keep in mind that it would not be wise to focus all of your efforts exclusively on the latter options, as then you would be massively raising your chances of volatility. Try and keep a diversified portfolio instead, one made with the better opportunities you can find. That way, you’ll balance your risk factor and your chances for success.