Millionaires are not made overnight and unless you happened to be born with a silver spoon in your mouth, the chances are high that you face an uphill battle if you hope to become financially independent. However, ascending to the summit of every mountain begins with the first step. How do big investors make the big bucks? Let’s look at some tried-and-tested strategies that can be employed by even novice traders.
1. Investing in Well-Established Companies
Blue-chip companies are often considered to represent the “bread and butter” of a healthy portfolio as a result of their inherent stability. These shares are also quite popular due to the fact that they will often offer year-on-year rates of return as high as 12 per cent. Any accrued dividends can likewise be reinvested; providing a solid fiscal base.
Taking a punt on a single company might be popular in films, but it is hardly a strategy adopted by major market players. Diversification allows traders to rise above hectic market conditions. This is why the portfolios of astute investors were not ablated immediately following the financial crisis of 2008. Variety is indeed the spice of (financial) life.
3. Commodities Trading
Commodities have always attracted high-end investors and wealth experts. There are a wide variety of underlying assets to choose from and these have been historically known to represent safe havens in times of crisis. Trading commodities is another proven method (items like cocoa & coffee) due to the fact that they are valued in dollars. Thus, foreign investors can leverage the inherent exchange rates to their benefit. Other examples include oil, precious metals, energy products, and even livestock. Once again, these assets can be used to round-out a balanced portfolio. They are excellent ways to offset relatively high-risk positions such as Forex pairs.
4. Solid IPOs
Imagine if you would have become involved with Facebook immediately before its initial public offering. Many well-versed investors such as Warren Buffett are known for their ability to “sniff out” firms which are set to make waves once they are listed. Although this requires skill and experience, there are several metrics to look for in the beginning. Examples include:
- What is their market capitalisation?
- Is the IPO backed by solid underwriters?
- How long is the lock-up period (the time frame before the shares can be sold)?
- Is their prospectus thorough and transparent?
A bit of research will certainly go a long way and this is why it is wise to check with the experts at CMC Markets. These individuals are trained to spot the latest opportunities and such professional advice should never be taken lightly.
5. Learning from Their Mistakes
Humility plays an important role when accruing wealth over time. Even Warren Buffett has made mistakes in the past and he is said to regret no fewer than 15 previous ventures. These errors should be viewed as educational opportunities as opposed to reasons to quit. Amassing a sustainable source of income takes time and you will inevitably stumble along the way. The key is to pick yourself and get back in the game. If you adopt this stance, then the possibilities of success are nearly endless.
Originally posted on October 30, 2018 @ 10:40 am