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Self-Directed Investment

Whether you’ve already made some trades or are thinking of joining the ranks of online investors, you may wish to consider the following:

Know what you’re buying. Cable news, magazines, and newsletters are full of opinions on the next hot investment. As much as they sound like great tips, be sure to check things out before making your selections.

Avoid the chatrooms. Online chatrooms are particularly rife with fraudulent information, or people with hidden agendas. Don’t get caught up in them.

Limit your exposure. Invest no more than five percent of your overall portfolio in speculative investments. More importantly, know your limit and never go beyond it.

Consider it gone. Adopt the mindset that you could lose everything you put into investments. This makes your winners more exciting and your losers less painful.

Don’t spend it all in one place. Putting all your money in a single investment only increases your risks. So choose a few different investments, keeping in mind that as the potential rewards increase, so does the risk.

Go in with a plan and monitor. Always have a target price at which to get out with your profits or take a loss. Track your performance by watching the daily prices and news related to your picks. Also, track the value of your account relative to your overall account.

If it sounds too good to be true, it probably is. Investments that guarantee or promise stratospheric rates of return do not exist, or they are being sold by scam artists. Either way, neither is a winning strategy!