Can you beat the money market?

So many people these days try their hand in the stock market with such high hopes. Whether they have been enticed by the plethora of advertising campaigns on the internet or television, or they have heard fantastic tales of making  a big killing in securities investments around the water cooler, the dreams of striking it rich are just too hard to resist. This seems to be true especially among young investors. 

The facts show that nearly 90% of these "get rich quick" dreamers give up on the money markets within the first year, usually departing with quite a bit less of their investment than they started with. You might be considering entering the money market yourself right about now. If so, you would do well to follow our learned advice to avoid making the same mistakes that these others have made.

The question you may have is: Should I take the chance?

The answer is a definite "Yes!", and we also might add that the sooner you start, the sooner you will begin to see returns on your precious investments. Of course, the usual disclaimer must be stated here: that investing in any type of market carries a risk, and you have to be prepared to take a loss at times. Yet if you start investing now, especially if you are young, there is plenty of time to recoup your losses and at the same time gain valuable experience, while likely realizing a gain within the first two to three years.

So, can a market really be beaten?

Again, the answer is "Yes!", even though the fact remains that only a very few people will actually see monumental returns on their investments in the short term, or for that matter in the long term.

As you have seen in our preceding articles, the money markets are being played by a whole host of professional investors, including portfolio managers, stock brokers, and the  banks themselves. These agents and their companies are experts in the market, and they are hard to outsmart. Many have tried and failed. As an individual investor, you should therefore set realistic goals , especially while you are gaining experience in the market. This isn't Las Vegas. You need to invest wisely, and protect your investment against these professional players.

Start off with a smart game plan. Set a focused goal at first and work hard to achieve it. The market is volatile by nature, and it will always see extreme highs and lows. Don't panic. Stick with your plan. As history has shown, times of panic are when the pros see their biggest profits. You will often see articles written in times of market panic that may seem to offer good advice, but the fact is that many of these articles are written by these professional investment firms to create the illusion of a panic so that they can profit. Do not lose your head.

One of the best rules to remember when investing in a money market is: pay attention to the trends. Don't jump at the first sign of a swing in the market. Rather, study how the stocks are moving, in your market as well as in general. Recognizing a pending move in the market is where you make your money.  Don't be discouraged easily either. The professionals spend many long hours studying the market trends, and often have the benefit of inside information, not to mention extensive resources, to influence the market to their benefit.

We offer three pieces of sound investing advice. If you follow these, you will not only hold your own but will, with time and experience, learn how to use your money to make money by setting a goal, avoiding panics, and keeping your eye on market trends.

Of these three, let's focus first on the two that are most fundamental: daily trading and basic investment. The novice or amateur investor will often focus solely on daily trading, their eyes glued to a newspaper or a computer monitor looking for "the next big thing" to come down the pike. This is the way many people, especially the young and inexperienced, study the stock market instead of sticking to the basics. This takes a high level of proficiency in market analysis using market value multipliers to gauge daily stock values. The problem with this approach is that it only focuses on shares with high liquidity, generally meaning the blue chip stocks.

Basic investing is the method commonly used by people who play the stock market as a supplemental investment strategy, and who don't have the time to actually study the market. Generally speaking, these people rely on portfolio managers who handle the client's assets for six months or a year and who focus mostly on stocks that are showing the best return. They earn their money by using their expertise and resources to study the market and fully analyze the workings of only a select group of the listed companies on the market.

If you are using one or both of these investment methods, it is still very important to stay with whatever strategy you have decided on. More importantly, keep a cool head. Nearly half of all money lost in the stock market is due to people jumping the gun and forgetting their goals, investing at the last minute in what seemed like a "sure thing". Remember, this is exactly what the forces who manipulate the market want you to do, and they go to a lot of trouble to make you do it.

The last and maybe most important piece of advice we can give you is to educate yourself daily and continually in the workings of the money markets. Become an expert yourself. At first, you will no doubt feel overwhelmed by the incredible amount of information required, and unfortunately the data will change on a daily basis. But the more you study, the more you will see how it all fits together, especially if you are involved in the basic investing method.

Besides all of this investing advice and general information, you must educate yourself in how the stock market works, regardless of your chosen investment strategies. This is especially true for those people who are new to the ups and downs and the ins and outs of the stock market. You must not only develop your skills in understanding the economy, keeping good books, and what is known as "macro-economics", but you should also consider taking some classes in how to analyze the money markets and the entities within the market itself.

In the beginning, you might want to let an investment agent handle your portfolio so you can see how it's done. Watch how they handle something like a "ration fund", study their methods, and ask for their advice and opinions on what is best for you.

The money markets are one of the best investments going today in terms of profitability, yet they are at the same time one of the riskiest of all the investment methods available. Remember, there is little to no margin for error. Making a mistake by not having a full understanding of how the market works can be avoided. Utilizing our methods will, over time, help you realize the returns you are looking for. The sooner you get started, the sooner you will be on your way to making money on your investments.