Here’s a hint, it doesn’t really involve actively trading securities on the stock exchange.
In fact, it isn’t “day trading” at all.
Many investors confuse day trading with money management. Managing your money means mitigating risk. It intels strategically position your funds to appreciate in value while taking on the least amount of risk possible.
When people think of the stock market, their thoughts are filled with the glitter and sparkles of getting rich quickly and easily, and these people get their asses handed to them… Obtaining true wealth happens slowly over time. It takes endurance, and resolve to withstand the ebb and flow of the markets. Not many people can manage their emotions and end up losing.
Instead, wealth management is more about asset protection. Only after your assets are protected should you start to position them in a way that optimizes their accumulation. Wealth accumulation is more about behavioral finance than knowing the markets.
The first thing you should learn in order to begin managing your money like the professionals is the risk/reward coefficient. It is the guiding principle when deciding how to allocation your funds and choosing asset classes.
Learn more about the risk/reward coefficient by clicking here.
Then start learning about the various types of asset classes by clicking here.
This post is going to be a quick one.
Here at Moneyshire we are always talking about approaching the market with an investors mentality. With that being said, we don’t usually recommend nor encourage day trading or “flipping” stocks for a quick profit. We believe that true wealth comes over time by having consistent behaviors that allow you to accumulate assets in financial vehicles that help mitigate risk and appreciate in ways that maximize tax advantages. (Phew, what a mouthful…)
So when it comes times to select which funds to hold, there is a free and simple tool provided by FINRA that helps analyze each fund. The main statistics to look at are the fund objective, Morningstar category, and expenses. These three metrics will help you identify which funds belong on your portfolio.
Check out the analyzer here!
Now, there are a lot of caveats to this post so follow the links below to learn more.
What is the difference between active and passive funds?
Understanding investment objectives.
Understanding Morningstar ratings and categories.