Successful investment strategy for beginners - 4
Opportunity is like a missed bus, someone said, if you miss one there is always another coming. This may well be true, however, the point to remember is that every missed opportunity in the market takes away with it a chance to make profit. This lost chance of making profit may be considered the cost of missed opportunity.
Missing opportunities in the market may be attributed to two very common reasons - fear and greed. Fear of losing all or part of the invested sum is quite common amongst investors and often leaves them in a state of indecision. Whereas greed, which is one of the principal forces driving the market, mainly affects those chasing unrealistic price targets. In both cases the opportunity quickly passes into the realm of "could have been".
Regular investment
Historical data of markets around the world shows that stocks of healthy companies tend to tread the growth path consistently, overcoming market crashes and economic downturns on their way up. Yet, many investors feel queasy watching their investments dip in value in the short run. Quite a few of them liquidate their assets in the market vowing never to return. The strategy of regular investment, if adopted for carefully chosen stocks, holds high promises for such investors. It involves deploying smaller amounts in the target opportunity at periodic intervals. This strategy uses the principles of cost averaging and allows one to spread the buying over a period so as to gain a stake at average price. It has been found to be very effective for risk averse investors and recommended by stalwarts such as Benjamin Graham and Warren Buffett. Several managed funds and brokerage houses offer investment schemes based on this idea.
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