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How to Invest Like a Professional Investor

Investing is a scary subject for many. Most amateur investors think investing is risky and are scared of losing money. Investing is not risky if you know what you are doing. The secret to controlling risk when it comes to investing is by investing first in your financial education before investing with your money. You have to invest like a professional investor.

This may sound like a common sense advice, but in reality most people feel investing is rocket science or feel they do not have the time to study to become a professional investor. Consequently. most people hand over their hard earned money to strangers they hope are experts, or invest based on advise they cannot validate because of their own lack of financial education.

When it comes to driving, we attend a driving school and obtain a driver’s license before we hit the road. A doctor goes to medical school, does internship etc before he practices. In virtually field of endeavor, we prepare first before we dive in. But when it comes to investing, most people dive in first without taking time to understand what they are doing. Investing without knowing what you are doing is very risky.

How do you invest like a professional investor?

By first of all investing in your financial education to enable you:

Analyze investments

Understand markets and trends

Tell between a bad advice and good advice

Tell between a good adviser and bad adviser

Tell between a good investment and bad investment

Tell if an investment fits your investment plans and financial goals

A professional investor takes his own decisions and does not swallow every financial or investment advice hook, line and sinker.

A professional investor can tell between a sales pitch and an investment advice. Without financial education, you are at the mercy of your financial adviser. Most financial advisers are employees working for fees or commissions. To earn their fees, they have to tailor their advice towards their products to earn their commissions.

A stock broker will advise you invest in stocks and mutual funds

A banker will advise you invest in a money market instrument

An insurance broker will advise you invest in an insurance product

A commodities trader will advise you invest in commodities

A real estate broker will advise you invest in real estate

Advisers look out for themselves while dispensing financial advice, hence the advice you get is based on who you talk to. Without financial education, you will not have your own answers, and will have to run with whatever limited advice you are given.

The most common question on the lips of an amateur investor is what to invest in, while a professional investor does his due diligence to determine an investment that will yield his required returns. The professional investor invests for both cash flow and capital gain while the amateur pins all his hopes on capital gain which is outside his control. Hence a professional investor has control over the investment while the amateur has no control and only hopes for the market to go up. The professional wins in up and down markets while the amateur only wins in a market boom and is scared to death of a market crash.

To invest like a professional, your first and most important step is to invest in your financial education and become your own expert. Rather than hand over your money to strangers and hope they know what they are doing, take control of your financial future by making decisions in your best interest. Nobody cares about your money more than you do. Become an investor before you invest. Invest in becoming a professional investor.

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