Nevertheless, there will still be a slight element of luck present. Look at the coronavirus pandemic as a perfect example of this. Nobody saw it coming, and by a complete stroke of bad luck, the world stopped. As a result, people lost a lot of money via investments, purely because the economy plummeted. There are examples of luck going the other way as well – for instance, you happen to have money in a particular cryptocurrency that gets endorsed by a celebrity. It’s pure luck that you had that investment, but you could be rich because of how popular it becomes.
While some luck will always exist, there are ways to take as much of it out of the equation as possible. That’s the secret to successful investments; you put yourself in a position where you don’t have to rely on good or bad luck!
Research topics beforehand
Always carry out research before you start investing in anything. Whether this is stocks and shares, crypto, real estate – you name it! A bit of research will go a very long way to helping you understand the market, the best ways to make money, and so on. It’s particularly important for any investments involving trading, as you need to understand when to buy and when to sell, etc. This removes a lot of luck as you’re more knowledgeable!
Stay updated with current trends
Understanding the trending topics in the investment world is crucial if you want to invest money without relying on luck. It’s all about knowing what to invest in before everyone else jumps on the bandwagon. There was an interesting piece by James T Crane CPA that touched on a few businesses that are doing really well right now. One of those was a CBD company, and he spoke of how the industry is booming right now. When you know this, you know that investing in that industry is going to be a smart move. Likewise, if you know what industries or businesses are on a downward trend, you can avoid them. So, less luck is involved as your investments are more calculated and backed by data.
Spread your investments
Creating a diverse portfolio is a superb way of combating any bad luck you might face. Going back to the COVID example, investors with a diverse range of assets were hurt the least. This is because their money was spread across a range of things, rather than just in one area. For example, if you invested in stocks for a retail company, the prices probably fell through the roof and you’ve lost a lot of money. But, if you also had money in crypto, you may have seen an increase in your earnings because that market boomed!
You will never 100% remove luck from the equation, but these three ideas will take as much of it out as possible. They’ll help you be a wise investor that spends money based on facts and knowledge, rather than closing your eyes and hoping fortune smiles down on you.