Investment Tip: Invest in What You Know

All sorts of people have all sorts of advice how to make money. Some of it is good, and some of it is bad.

How do you sort out the difference?

No One Right Answer, but…

Obviously, having experience will help you sift through the bad opportunities to find the good ones, but even seasoned pros make mistakes. Just take a look at how many people that are old enough that they should be retiring, but they cannot.

There are several things that you can do, but one of the biggest things is to stick to investing in areas that you know.

Often, it’s tempting to jump into other waters. You hear many people talk about the next newest “hot thing.” They make it seem so exciting, and it is—until they lose their shirt.

I’m not saying that everyone will lose their shirt, but often more people will than will not.

Check out the dot com stocks of the late 1990’s and early 2000’s. They were trading for absurd amounts. The problem was that the prices kept getting even higher. Was there no end? If I don’t get it now, I’ll miss my chance.

That’s right! You’ll miss your chance—to lose BIG TIME. By the time YOU are hearing about it, everyone else has, too.

Except…

When you know your area, you generally know well before anything gets reported. This makes sense, because it is YOUR expertise. It is a lot harder for you to overlook something when you’re fluent in it.

There are so many areas that you can make money.

When you invest outside of an area that you know really well, THAT is when investing becomes most risky. In fact, there’s another term for it…GAMBLING.

If you follow this one rule, I can almost guarantee that you’ll have a lot more success than your fellow investors who are always chasing the next “hot thing.”

Which would YOU rather be?