Saturday, 2 July 2011

Six methods to reduce your investment risk (Part 7 of 8)

[6] Save regularly, monthly if possible, in order to ensure that you will also invest during periods of pessimism.

Psychologically, it is easier to place your money in the stock market when prices are rising than when the world seems to be falling apart. Nevertheless, periods of economic misfortune tend to be the best to purchase assets at a low price.

This last principle is the most difficult to apply, since it requires enormous self-discipline. If we overreact to painful past experiences, we will overlook great investment opportunities.

When the stock markets of the world go through a difficult period, the low prices can offer excellent possibilities for the future. If you adopt the habit of investing regularly, you will be able to make profitable decisions when few are willing to take any risk.

To be continued in the next post.


[Image by Linda Duchaine under Creative Commons Attribution License. See the license terms under]