Helpful Tips for Investing Success

by Ken Rupert. 0 Comments

Investing is an interesting sport. As in sports, the investor needs to develop and execute a well thought out offensive and defensive game plan. Professional sports teams study film to understand and learn the behaviors of their opponents. The investor needs to study the market to understand and learn the behaviors of the market from an industry and sector perspective. This will help the investor to make the right moves towards success. The following 13 tips are provided to help the novice investor develop a solid investment strategy.

Buy your way into the market – When you have completed your research and have made the emotional commitment to purchase a stock, mutual fund, or other investment vehicle, set a target, set a time frame, and execute with endurance. Do not buy the targeted number of shares all at once. Dollar cost average into the market by making a number of small purchases over a given amount of time. If you set your target at 500 shares of a stock, take time to purchase 100 shares at different intervals. Trading fees should be calculated into the cost of your purchases and you should think of these fees as the cost of doing business. Another way to maximize this tip is to buy a set number of shares of a dividend paying stock. Reinvest the dividends into the stock and accumulate shares up to your pre-determined target. This is a slower way of using the dollar cost averaging method, however, you will not incur the brokerage fees associated with making a direct trade. Be willing to exit quickly – When an investment goes south, be willing to step out quickly and all at once. Stocks that are moving contrary to the market (i.e. the stock is going down while the market is going up) can trap you in an emotional dilemma. The best response to a diving stock is a logical decision. In order to achieve this logical state, you should set a price-dive percentage and place a stop loss order on the more risk-prone stocks. If you decide that a $30 stock that falls by 6% is worth selling, then you would place a trailing stop loss order at $28.20 per share. This will preserve a majority of the principle and reduce the potential loss of greater than 6%. You will want this trigger point to be set at least 6% since some dividend paying stocks have a tendency to drop in price after they go ex-dividend. A trailing stop loss order acts favorably when your stock is advancing. Learn to utilize the entire trading toolkit available – Learn and understand the types of orders that can be used to enter the market low and exit the market high. A limit buy order allows you to set the price you are willing to pay to enter the market. Limit sell orders can be used to set the price at which you are willing to sell. A stop loss order protects your gains by selling your stock at a predetermined price as the stock falls in value. A trailing stop loss order will follow your stock up in price but will preserve your gains as the stock declines past a predetermined price. Knowing how to use these tools can help you get in and out of the market on your terms. Expect the unexpected – Plan for the best case scenarios but never forget the worse case potentials. The market goes up and the market goes down. If you are able to keep that in mind, you will have won most of the battle. Expect bad earnings reports. Expect sectors and industries to fall out of favor. Expect the unrest and chaos of other parts of the world to impact your wallet and portfolio. Expect that what was true today will not necessarily be true tomorrow. Are you getting the point? The market’s evil step-brother is named Murphy. And when you expect him to show up he has a tendency not to disappoint. The best weapon against the unexpected is plan A, plan B, plan C, etc… Have an emergency fund for your emergency fund and have an alpha plan and an omega plan. Emotional investing is a sign of lazy thinking – In all cases you need to overcome your emotional response to a market dip and a market rise. Getting too low or too high on market moves will present problems. Your intellect must be superior to your emotions. You will, no doubt, experience emotional impulses to sell on market dips and to buy on market rises. The best way to over-ride your emotional impulses is to devise a logical investment strategy and remain true to the execution of that plan. Leave no stone unturned when devising a strategy and leave every stone in place when executing that strategy. Be willing to pay for information from trusted sources – Free advice can be a warning sign of an agenda. Be willing to pay for a service that empowers you. The traditional financial planning industry offers to take your financial resources and put it in investments that will perform well. They seemingly do this for free since you do not have to write a check to pay your planner. That is because their commission is paid by the loads that you pay to invest in certain funds. You never see the exchange of money but it is there. And when the funds do poorly, the financial planner will be reluctant to move you because his commission is based on the load you pay each time you invest in those funds. A fee based financial strategist will take the time to listen and devise a strategy that will align your investment strategy with your goals. You will learn from a fee based strategist because you retain the power over your money. Fee based strategists do not base their preferences on the wealth of a client. They base their preferences on what is best for the client because they know that a satisfied client will continue to employ their services. Be open-minded to different options – There is no one strategy that works for everyone. If there were, we would all be wealthy. An older couple with several million in retirement savings will be in different investment options than a thirty-something trying to crawl out from under an upside down mortgage and the debt associated with fast living. And certainly a family of a special needs child will have different motivators to build and preserve wealth. The key is to not get trapped into thinking that because an admired financial superstar teaches to do something a certain way, that you also need to do it that way. Your decisions concerning investing should be structured to your specific needs and goals. If you do not have a million dollars, you cannot invest like a millionaire. You have to shape your strategies to fit your realities. Wisely divide your investment dollars – I have heard some financial teachers talk about only committing 10% of your investment capital towards single stocks while keeping the rest in mutual funds. Warren Buffett suggests researching a stock and once you decide to buy, buy as much of the stock as you can afford. As much as I can appreciate these approaches, I do not necessarily subscribe to them in their entirety. What I would caution a client against is being too heavy in one stock. The more resources you can spread out across the different sectors and industries the more diversification you can create within your investment accounts. Here you need to set parameters such as no more than 7% of your overall investment dollars committed towards a single stock. Therefore, if you have $163,294 invested you would not have over $11,430 invested in any single stock. You have the power to set these parameters as long as you retain the power over your money (see #6). However, keep in mind that just as you have the power to set these parameters, you also have the power to ignore them. That is why this rule states to WISELY divide your investment dollars. Keep cash to take advantage of opportunities – Keeping a small percentage of cash in your investment accounts provides you with the flexibility to take advantage of other opportunities that might present themselves from time to time. Sometimes a stock split, an IPO, or a conversion of a common stock to a REIT will provide you an opportunity to increase your return. You might also look for the arbitrage created through mergers and acquisitions. However, if you do not have a small cash reserve, you will not have the available funds with which to purchase enough shares to make your efforts worthwhile. Stay away from special dividends – When a stock declares a special dividend do not be tempted to purchase that stock to capture the larger than normal dividend. Keep in mind that when a stock goes ex-dividend, the stock price will drop by the value of that dividend. Most stocks that offer a special dividend rarely regain the Cum-Dividend price (at least in the short to mid range time frame). This means that you have tied your money up in a stock that you will have to ride out other market ups and downs waiting for the stock to return to the cum-dividend price. Stick to Monthly or Quarterly dividend payers. In the event you get trapped holding a quarterly dividend paying stock, at least you can count on a dividend every three months until you see a gain that encourages you to sell out. Learn to see the opportunity beyond the risk – Trading in stock carries a certain level of risk inherent to market fluctuations. Sometimes seeing opportunity takes a little more effort because of all of the noise of risk. Risk can be like a marshal amplifier hooked up to a Ted Nugent guitar solo. It can distract you even after it has stopped because of the ringing in your ears. It is also like a strobe light pointed directly at your eyes. After the flash stops going off, you have to wait for your eyes to get readjusted. But just as the secret of the strobe light is to not look directly at it, in order to see opportunity beyond risk you have to learn to look around the risk and identify potential opportunities. Investments are never without risk. However, taking the risk gives you the greatest potential for increasing your net worth and ultimately achieving the goals that you have set for yourself. Get to know and understand the dividend pattern of certain stocks – Doing this allows you to purchase certain stocks prior to the declaration date. Purchasing a stock before it declares its next dividend allows you to ride the wave as demand for that stock increases and the price responds appropriately. You have to be careful to execute on both of these admonitions: Get to know certain stocks and get to understand their patterns. Some stocks pay annual dividends that can be quite attractive. Knowing when these stocks declare can allow you to purchase at a time that is advantageous for you. Sometimes you can capture a larger capital gain than dividend. The key is to study a small number of stocks that exhibit a historical pattern that can be manipulated to your advantage. You cannot time the market – but you can time the dividend – Although there might be better entry and exit times during the course of the trading day, week, or month, it is not likely that timing the market is always attainable. Therefore, it is important to recognize that timing dividends is a whole lot easier.  With just a little market knowledge, an investor can know when dividend paying companies have declared their record and dividend payout dates.  This knowledge allows the investor to buy stocks that are poised to payout substantial dividends.  It also allows an investor to know when to sell stocks.  Start by looking for companies that have a history of consistent dividends.  In many cases, finding a company that has consistently high dividends is preferred since the goal is to maximize profit. After identifying the company you are interested in, just remember the alphabet.  B before E and O on R!  B before E means BUY before the EX-DIVIDEND DAY.  O on R means OWN on the RECORD DATE.  This ensures that the investor captures the dividend. Ex-dividend dates tend to be two days before the record dates. Buying one day before the ex-dividend date endures ownership on the record date.

Before you develop an investment strategy, make sure that you have a fully funded emergency fund with at least three to six months of expenses and no outstanding debt (except your mortgage). If you have not established this level of financial stability, visit and learn how I can help you achieve this goal. If you are interested in having a personal success life coach please contact me for a free consultation by e-mailing me at

The mission of The Vita-Copia Group is to build pathways of success that change the dynamics of “the game” through the purposeful and strategic manipulation of the given economic, social, and political environment so that each individual can achieve his or her own personal goals, produce his or her own desired results, and maximize his or her own full potential as designed by God.

Disclaimer: Always check with your financial advisor before making investments. Never invest in a company until you understand how that company generates cash and is managed. The aforementioned tips are not advice to invest in specific types of investments. The information provided is designed to increase your knowledge and encourage you to research the veritable plethora of investment opportunities before investing. 

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