Usually, when it comes to investing, people who’ve never invested are less familiar with the basics and face several difficulties. But luckily, we are here to equip you with the right amount of knowledge. Adding to that, some investment cliches can also help you kick-start your investment journey.
Although these cliches can help you make investment decisions, just as food and medicines go hand in hand when we aren’t well, similarly, these cliches are not the final solution to your query.
What are Investment Cliches?
Investment Cliches can be defined as a group of commonly used expressions or phrases related to investment. Renowned financial experts, advisors, or analysts consistently use them in investments or finances. Considering they assist many people to make wise decisions, when used repetitively, they lose their impact, or they just become misleading within a certain period.
Some examples of these investment cliches can be “Buy low, sell high”, “Diversification is the key” etc.
With this article, we’ll enlighten you all with the top 6 investment cliches and how true they are.
Top 6 Investment Cliches
1. “Buy low, sell high” – This is one of the most used cliches in the investment world, which says a lot about buying and selling. This implies that you should buy an asset when it’s undervalued in the market and sell those when they’re overvalued. With this quote, the main idea is to enlighten the investor about this buying and selling formula. The aim is to always identify the asset being undervalued and when the same gets overvalued in the market. This is quite straight and simple, yet people are seen committing the opposite and face losses.
2. “Diversify your portfolio” – The second one is classic and discusses diversification. So when the assets are large in numbers, you can simply increase the investments around different classes. With this tactic, you can reduce the risk of losses to a great extent. Let’s say you buy a share in X company and then Y, K, L companies as well; the returns would vary, reducing the chances of big losses. So this one also stands quite true in the real world of investment.
3. “Time in the market is more important than timing the market” – This cliché is true because it’s difficult, if not impossible, to predict short-term movements in the stock market. Instead, focus on a long-term investment strategy and stay invested even during market downturns.
4. “Buy what you know” – The fourth one is a bit old school. The meaning goes by like you should be starting with the companies you know well and what are their potentials or risk factors. But don’t just stick to being aware of the points mentioned above; analyze closely, do thorough research, and come back strong with your final decision.
This is yet another true investment cliche that you can rely upon!
5. “Know what you own and the reason behind it” – This one relates to the fourth one to some extent. When you buy some asset in the market, you should be aware of the price, the risk, the rate of return, and even the names of shareholders in that specific company. When you’ve everything crystal clear in your head about the company you’re going to invest in, you can make better decisions regarding the investment.
Your current decisions about any stock or a share would significantly impact your future regarding that investment. So do it mindfully.
6. “The trend is your friend” – Last but surely not least, this one emphasizes ongoing trends rather than sticking to the old ones and trusting them blindly.
This straight up implies that you should always trust the stock that is ahead in the race and going upwards. The one who’s above in the race would surely show great results in the future as well.
Conclusion
After coming across these six investment cliches, it’s crystal clear why they bring so much value to anyone’s life. But having said this, they are only sometimes accurate and can vary depending upon different situations such as changing market dynamics. For example, there can be new rules regarding the investment market, for which the investment cliches might not work.
Thereby it’s crucial to conduct proper research and analysis before investing and relying on any investment cliche.
