“If investing is entertaining, if you’re having fun, you’re probably not making any money. Good investing is boring.” George Soros
Investing started to look like a lot of fun in 2021. Meme stocks got a cult-like following, cryptocurrencies reached dizzying heights and Tesla’s share price doubled.
However, as George Soros points out, fun investing isn’t necessarily a good idea and while 2021 was enjoyable for many investors 2022 feels very different.
New investors may want to give up at the first sign of market volatility. However, this would be a mistake. Investing is essential for your financial well-being. It protects you from inflation and grows your wealth.
However, investors are often faced with contradictory advice or recommendations from experts who they know nothing about. Sometimes it can seem that all a person needs to become a financial ‘expert’ is access to social media.
Why invest in the stock market
The stock market has a historical track record that investments such as NFTs, bitcoin, and other cryptocurrencies simply don’t have.
Take the FTSE 100. Created in 1984, shares in the index have returned an average of around 8.9% a year (excluding 2022).
The U.S. stock market has generated even higher returns. Between 2010 and 2021, stocks in the S&P 500 made an average return of 13.6% a year, with technology companies dominating, often delivering outsized returns.
Of course, not all years, or even decades are as profitable, and some can be disastrous. Historically, however, stock markets recover from crashes. The one exception was the Japanese stock market crash of 1989. However, even in this case, investors who steadily invested (rather than buying all their stocks when the market was at its peak) will have likely recovered their losses and made a profit.
This is why steadily investing for the medium or long-term, gives your money the best chance of working for you. Periods of market volatility can offer particularly attractive investment opportunities, if you know what you are doing.
3 ways to make smart investments
No matter how the markets are performing, here are three ways you can make smart and confident choices.
1. Follow top experts
Why follow social media hype when you can follow experts with a proven track record? TipRanks tracks tens of thousands of financial experts such as analysts, company directors, and financial bloggers and measures their performance. If you hear about an analyst who has given a stock a Buy rating, you can use TipRanks to search for that analyst and see how well they rank. You can even discover how they perform on a per-share basis. If you want to see who the best performing experts are, just head over to our Expert Centre where you can follow the experts of your choice and be notified whenever they rate a stock.
2. Analyze shares before you invest
Before investing in a stock, it is worth analyzing market sentiment. TipRanks is the only platform to offer unique datasets such as aggregated analyst consensus and price targets, news sentiment, and blogger opinion, as well as more traditional data such as graphs and charts. As this analysis can sometimes result in contradictory signals, you can review a share’s Smart Score, a data-driven score that indicates whether a stock is considered likely to outperform, underperform, or is neutral based on key market factors. This is how it looks when you analyze Shell.
3. Track your holdings or the shares of your choice
Smart Portfolio is our flagship tool. Sync your portfolio or upload your shares to receive expert insights into your holdings and see a deep portfolio analysis, including how your portfolio compares to other investors. What’s more, just as TipRanks ranks experts, we rank individual investors too, so you can compare your performance not just to benchmarks, but to other investors.
You don’t need to invest in a share to follow its performance, instead, you can follow the shares of your choice for real-time notifications about expert transactions or significant price movements.
We invite you to upload your portfolio for a free analysis and let us know what you think!