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How to protect your assets in the stock market

Dernière mise à jour : 5 juin 2021

The stock market does not necessarily mean chaos if you have a clear strategy and you can read and predict trends.

In the stock market, like everywhere, one needs to apply common sense. Let us share a few tips to protect your investments and avoid frequent mistakes.

“In the stock market, like everywhere, one needs to apply common sense.”

There are certain rules that need to be followed in everyday life and in the finance world. One such principle is that we should avoid to buy something at a high price and sell it at a low price. Despite everyone knowing this simple rule, human beings tend to forget rules and get emotionnal when it comes to money.

Do not invest without doing your homework

The first basic rule is to do some due diligence prior to investing.

The classic mistake would be to buy a certain stock based on brand recognition rather than on the merit of the stock. It may be a great company but not an interesting stock to buy. Or a great stock to buy but the timing is not right.

It is also important to analyse the price of the stock, the general trend (how much has it been increasing, can we identify price cycles, etc.), as well as the general trend of the stock market.

Some investors may like capital gains and look for fast increase in stock value. For those, technology companies may be a good option.

Other investors may want stocks that pay regular dividends, a good way to progressively build passive income. In this example, technology companies (with a few exceptions like IBM) may not be the best option as they rarely pay dividends to their shareholders.

If you do not want to spend time researching companies and stocks, an activity that may be very time intensive, you may want to consider the shares of some funds who do the work for you and invest in various companies on the stock exchange.

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