Here’s what I would say to myself if I could just go back in time to when I first started trading…
You don’t know what you’re doing yet.
Put some money in a relatively safe place that gives you something back, and actively trade with a small amount of your savings.
I often hear that investing in one of the market indices is a safe and reliable way for investors to consistently earn money. Depending on when you invest, of course, plunking down some money there over the long term can give you between 6-10% on your initial investment, more overtime if you reinvest those earnings.
Considering what the banks pay, that is nothing to laugh at.
But again, what you get back depends on when you invest and what the market does after that.
If what they say is true, 6-10% a year on an investment like that is a good deal, especially for someone just starting out.
It’s a simple strategy with some risk.
In all of the trading videos I watch, they say again and again that new investors should not expect big gains. They say again and again that new investors blow up their accounts regularly. The warning signs are everywhere.
You’re going to lose money!
If I’m not going to make big gains and I’m going to lose money as a new trader, a simple strategy with some risk sounds starts to sound good.
New investors just don’t have the technique required to employ trading strategies as effectively as experienced traders.
Although it isn’t as sexy as actively trading, to avoid blowing up your account, it just makes sense to put a good portion of your money where you can, with some risk, get money back on your investment.
It just makes sense.
When you get more experienced, using that small amount you are trading, move on to greener, albeit, riskier pastures.
…At least that’s what I’d tell my newbie-trader-self.