Saturday, June 23, 2012

Online Investing For Beginners – 7 Tips to Ensure You Make a Real Profit

Anyone who wants to start online investing with their hard earned money should look for a combination of security and good returns. Whilst the risks are somewhat higher than standard bank deposits the potential rewards reflect this fact. Learn how to prosper and avoid the pitfalls by following these 7 easy tips:

1. Think about tax liability right at the beginning

A key consideration with any online investment is the level of tax you will be liable for. If you are starting out with a relatively small bank and one or two investments you may take the decision to declare your earnings as personal and pay the necessary tax. If you have a significant sum available or you want to make plans for the future you should seek advice from a tax professional before making an investment.

2. Find someone you trust

Don’t believe all you read without checking yourself. Find people you can trust and ask them their opinion before getting involved. There are many seasoned online investors who would be happy to help those who are just starting out. Take time to seek these people out, test what they say and if you are happy use them as a sounding board for any investment you want to make.

3. Have a separate bank

You will need to have the correct mindset when investing online. This equates to treating any money you invest as a business transaction. It is important to monitor the progress of your investments both for maximising your returns and identifying early warning signs if problems seem likely.

4. Sign up with payment processors

Each online programme has a range of payment processors that they can use to accept deposits and pay withdrawals to. There are several companies that have been in existence for prolonged periods and who offer a reliable and trustworthy service. You should open an account with each of the major payment processors to ensure that you maintain flexibility. You will only need to fund them when making deposits or withdrawals from your online investment programmes.

5. Retrieve seed money

It is tempting to make an investment and then use the power of compounding to build up your funds. As online investments are generally risky you should withdraw your original investment as soon as possible. This means that you are then only risking Other People’s Money (OPM).

6. Don’t use money from day-to-day living

A cardinal rule of online investing is to only invest with money that you can afford to lose. Do not use funds that you need to maintain a reasonable standard of living. Online investments carry a riskier profile than many standard investments and you should always bear this in mind when deciding how much to invest. It should only be a portion of your overall savings.

7. Patience

One great virtue to have when investing is patience. No matter what you are told there will be occasions where things go wrong or slow down. When this happens don’t panic, give the admin time to resolve the issue. Some very reliable programs have ceased because investors weren’t patient enough to allow problems to be sorted out, they made disparaging comments which led to unrest and ultimately the demise of the program.

For more great tips on online investing you can visit my blog at http://www.onlineinvestingguru.com
From John Murphy and Online Investing Guru

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