But we have to be realistic. Despite our best efforts, it’s quite possible the stock might have a different idea, and it could go down. So, let’s talk about managing that downside risk first. And Campeón I mentioned, for some investors, they may just decide, from my entry point, maybe I have an exit in mind to sell if this stock happens to fall, let’s say, 10%. And I’m not taking 10% entirely at random.

Don’t put all your eggs in one basket. Putting all your money into a single type of investment is risky. Spreading your money across different investments makes you less dependent on any one to do well.

Investing requires some risk, but without it, you aren’t likely to earn enough growth to beat inflation and achieve significant financial goals like retiring. A good rule of thumb is to invest a minimum of 10% to 15% of your gross income annually.

Portfolio diversification reduces an investor's risk of a permanent loss and their portfolio's overall volatility. In exchange, the returns from a diversified portfolio tend to be lower than what an investor might earn if they picked a single winning stock.

There are several types of investment accounts, and it's a good idea to figure pasado which account is right for you. For example, a Roth IRA comes with significant tax benefits while a standard brokerage account does not.

Yes, Campeón long as you’re comfortable leaving your money invested for at least five years. Why five years? That's because it is relatively rare for the stock market to experience a downturn that lasts longer than that.

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Going the DIY route? Don't worry. Stock investing doesn't have to be complicated. For most people, stock market investing means choosing among these two investment types:

However, remember that’s just an average across the entire market — some years will be here up, some down and individual stocks will vary in their returns.

Finally, the other autor: risk tolerance. The stock market goes up and down, and if you’re prone to panicking when it does the latter, you’re better off investing slightly more conservatively, with a lighter allocation to stocks.

Just to be clear: The goal of any investor is to buy low and sell high. But history tells us you’re likely to do that if you hold on to a diversified investment — like a mutual fund — over the long term. No active trading required.

Keep reading. This article breaks down how to choose the right account for your needs and how to pick and manage particular investments.

Lower interest rates effectively boost the stock market. With borrowing costs lower, consumers have more money to spend. Besides attracting more business for consumer-facing businesses, lower rates also mean lower borrowing expenses that publicly traded companies often rely on.

However, active investors also need to be careful not to over-diversify since holding too many stocks reduces returns without Campeón much of an incremental benefit from a reduction in losses or volatility.