Brian M. Stovsky Says New Investors Should Understand These Key Concepts
Looking to kickstart your investing efforts? Finance expert Brian M. Stovsky, who works in investment banking, is going to cover some valuable, must-know topics. By increasing your knowledge of investment markets and concepts, you may increase your chances of success.
“As far as investing is concerned, knowledge often is power, or at least, profits,” Brian M. Stovsky says. “If you understand how investment vehicles and markets work, you’ll know what to watch for.”
When it comes to investing, perhaps no concept is more important than risk. You may have heard the common saying “where there is risk, there is reward.” This proverb generally proves true in investment markets.
Often, investment opportunities that offer high-profit potential also typically carry higher risks. You can also think of this as “go big or go home,” either you win, a lot, or you lose everything. Understanding risk profiles for various investment vehicles is essential.
“If you’re just starting to invest, I recommend you study how risk works,” Brian M. Stovsky says. “Sure-fire get-rich schemes almost always fail. High-risk investments, meanwhile, can earn you a lot of money but can also cost you most if not all of your investment.”
Point is, if you’re new to investing, make sure you study risk. You should also understand the “big picture.” Many things can impact investment markets, including macroeconomic trends, government policies, and the like. Sometimes investors don’t pay close attention to these factors, instead focusing on finances and the like.
“If the government announces that they’re going to cut taxes or trim interest rates, it can send markets soaring,” Brian M. Stovsky states. “Likewise, if the government unveils a massive plan to increase spending in renewable energy, many renewable energy stocks will surge.”
As an investor, it’s wise to keep an eye on the news, watching the headlines and the like. While you should always pay attention to news about the economy, pay attention to other factors too. For example, a warm, long summer might lead to increased travel, which could bolster travel industry stocks.
Brian M. Stovsky Discusses Asset Allocation and Portfolio Diversification
It’s generally wise to keep a diversified portfolio. This includes both the types and classes of assets, as well diversification among the securities themselves. It’s generally wise to split your wealth among stocks, bonds, index funds, real estate, and other types of assets. Consider this, if stock markets sink, but real estate markets hold steady, your real estate investments might offset losses in the stock market.
As for different asset classes, you want your investments within different classes to be diversified. Within your stock portfolio, for example, you might invest in technology, food production, and the travel industry. Your technology investments might further be divvied up among Amazon, Microsoft, Apple, Google, and a smattering of smaller companies.
“Diversification is essential for just about every investor,” Brian M. Stovsky. “If you’re not sure how you should diversify your investments, consider talking with an expert.”
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