Entering into the professional environment can prove to be very rewarding in the long run and yet, there are numerous obstacles which await. One of the most common situations is that younger generations fail to produce the liquidity required to lead a comfortable life and to prepare for the future. Fortunately, working longer hours is no longer the only solution. There are numerous investing strategies which can be employed in order to enjoy sustainable wealth and many of these are only moments away. Let us look at some expert trading suggestions as well as how these can be applied effectively.
The Rule of Five Per Cent
Also referred to as the “5 Per Cent Rule of Investment Allocation”, this principle essentially states that you should have no more than five per cent of your net capital involved in an open position at any given time. For example, a portfolio of 20 stocks will allocate five per cent to each position (equating to 100 per cent in total). This is an excellent way to achieve diversification as well as to minimise the levels of risk. Violating this rule could cause you to become overexposed and suffer substantial losses.
Commodities are another very popular investment opportunity for younger professionals. There are two main reasons behind this perspective:
- Commodities tend to be excellent long-term positions.
- These assets are not as volatile as open-market stocks and shares.
Common examples here include gold, silver, oil and even futures contracts such as orange juice and coffee. Many experts agree that every portfolio should contain holdings within the commodities sector. While these are excellent long-term positions, we should keep in mind that strategies such as spot trading will help you to accrue wealth from a short- to medium-term point of view.
We must now examine the psychological side of trading. Let us assume for a moment that you are a young professional who is currently employed 40 hours a week. This may appear to be problematic when attempting to build a solid portfolio, as time can be a rarity. Many would-be traders have been discouraged by such an observation. Keep in mind that time management is crucial. Try to set aside at least an hour each day which can be devoted towards stock market analyses, executing positions and catching up on the latest news. In the same respect, avoid trading if you feel tired, distracted or otherwise overwhelmed with your existing workload. This will only lead to otherwise avoidable errors.
Testing the Online Waters
Online trading is the most popular method to grow wealth over time. Unfortunately, not all virtual platforms are created equally. Only use those which are trusted and which employ the latest investing tools. For example, you can set up a demo account for free here to appreciate the amenities at your disposal. This is also an excellent way to further hone your skills.
By adopting the right approach and keeping these suggestions in mind, you will be financially prepared for what the future may have in store.