Tips for amateur investors…

Over these past few days where USD/TRY has begun to drop again, the “Will it go up again” question has been replaced with the “How far will it fall?” question.

Here’s my tip for investors: Always try to be cautious when you can’t see any real, substantial reason for fall or rise. As I always say, it’s not easy to expand your investments if you made them using your entire savings. It gets hard to sell when the price is up or down. As for the buying, it’s not even an option. I just told you why: That’s because you have already used all of your savings.

There’s no such thing as a risk-free investment. The important thing, however, is how much risk you take. For instance, an investor who puts almost 60% of his/her savings and keep the rest in cash may be considered “not a fan of risk”. But, this person has a large room for manoeuvre. S/he sells their his/her assets as their price goes up, and when the price is down, s/he might be able to grow his/her savings if s/he keeps remain around 60-40 percent with the cash in hand. Some may choose to change these proportions as 70% investment to 30% liquid as individual investment behaviour varies by risk profile.

“Good investors don’t reveal everything they know, so beware!”

I’ve heard so many people say, “the more risk you take, the more money you make”. I must say that only a few of these people have made the right suggestion. Besides, veteran investors never divulge an info that might bring them competitive advantage.

Sometimes I come across with people who have lost money because of the hot investment tips they got from a colleague, a friend or a client.

“A regular client was insisting that I should purchase some stocks. He said I would always owe him a favour if I do this. So, I bought some stocks. But, the stock’s value started to decline. And the ironic thing was that it began to going up after I sold it.”

It’s a story you can hear from anyone, anytime. I’ll cut to the chase and tell you that it is hard to make money. Go through every detail you can before investing. Do not trust everyone. But most importantly, be patient.

Prof. Dr. EmreAlkin