The Bull Hunters Guide

This is the last post for a while to cover the topic of basic investment strategies. In the coming installments, I’ll branch out into more diversified topics and try to get a little more in depth into each one. In the meantime, I hope you’ve enjoyed this series on basic stock market strategies and I sincerely hope that they’ve improved your ability to successfully invest in the market and see good returns.

Please refer your friends to this blog so they also can enjoy a free way of improving their investment knowledge. Now, back on topic: Basic Investment Strategies.

Reinvesting your interest

For this article, I’ll cover a tip that more people need to take advantage of in order to keep the cycle of their investment going. Namely: reinvesting the interest.

First of all, never draw from your portfolio for spending money unless it’s absolutely necessary. You should have a separate savings account for matters such as that, and it’s from here that you draw when you need to travel, or make repairs to your home, or things of that nature. Your portfolio is a long term investment, and drawing from it early is a blow that will strike you much later down the road, with a force magnified many times over.

Moreover, because it’s a long term investment, avoid the trap of seeing the interest generated by your investments as “free money”. Sink it right back into your investments by buying more shares, so that the cycle can continue and that your payouts will grow larger and larger.

Check the balance of your portfolio

Try and keep a schedule going where you regularly check the cash balance of your portfolio, and when it hits a certain amount, spend some time looking around and buy new shares, either in new holdings or more in ones that you already have a stake in.

By treating your investments in this way, you are ensuring that your profits are maximized because the interest will continue to compound over the years (and usually at a rate much, much higher than typical means of savings such as bonds and savings accounts). Your portfolio will thank you for it.

Thanks for hanging around for the 12 week series of Basic Investment Strategies. I sincerely hope you have enjoyed it. Please leave a comment in this blog if you appreciate the effort and I will reward you with plenty more stock market investment strategies.

Join me next week as we start our trek into some more in-depth investment topics: Stock Picking Strategies.

Sean Rasmussen
The Bullhunters Guide
Universal Wealth Creation © 2004 - 2008

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This week, we’re going to cover another one of those “common sense” strategies that nevertheless always seem to be so helpful. The real problem with common sense is simply that: it’s common. It’s always right there, out in the open, so as time passes, people tend to overlook it. A pretty ironic situation, really. In light of that, let’s take a look at one of the bits of conventional stock market wisdom that really needs to be driven home, especially for young investors.

Compounding growth

Like with any other type of savings, compounding growth is more or less the end all and be all of investment. What starts as a 1000 dollar investment that gains 10 percent becomes a 1100 dollar investment. If it hits that same growth again, it becomes a 1210 dollar investment, and then a 1331 dollar one. Simply put, the longer you have your money working for you in some type of investment, the more growth it can achieve.

As such, it is critically important to start investing in the market as early as you can. Young investors need to take a look at the idea of diversification and find some way to balance that virtue with the virtue of having a few core stocks that you tend to keep with you over the life of your portfolio (always keeping an eye on them, of course).

Early means more time to profit

Investing early has another meaning as well: if you invest your funds early in the life of company, they will have more time to spend with that company as it matures and develops. If it goes on to be a successful company, you will have maximized your earnings by investing in them as early as you possibly could.

Remember, the real name of the game here is compounding. Receiving a gain on money that you invest is exactly equivalent to investing that new larger amount. As your initial investment grows, so to does the potential for future growth on that investment. Developing a long term strategy can help you go a long way.

See you next week for part 8 of Basic Investment Strategies.

Sean Rasmussen
The Bullhunters Guide
Universal Wealth Creation © 2004 - 2008

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