A growing number of so-called financial "gurus" have touted the benefits associated with online investing. Some promise millions overnight if their methods are followed while others claim that this hobby can produce a sustainable source of income within a short period of time. Is there any validity to such statements or are these nothing more than shrewd sales tactics? Let us take a quick and entirely objective look at what you stand to gain as well as some common errors that may serve to hamper your efforts.A Look at the BasicsThe main theory behind online investing (and the primary way in which it differs from traditional forms) is that you no longer need to work with a middleman. In other words, the majority of commissions and fees have been dramatically reduced.
This leads to higher profit margins and hopefully, an additional income stream. Much like in the real world, there are several asset classes to choose from including:
- Contracts for difference (CFDs)
- Forex pairs
- Exchange-traded funds (ETFs)
- Bonds and treasuries
These are also excellent ways to keep abreast of any late-breaking fiscal news; offering you the ability to make snap decisions within seconds as long as a strong wireless connection is available.Mistakes to avoid Along the WayStill, the notion of becoming a millionaire overnight is far from the truth. Success will require hard work, dedication and the occasional pitfall. This is why it is important to recognise some of the most common errors made by novices. It can be argued that greed plays a critical element, as this emotion often affects your judgement.
Maintaining an objective viewpoint is therefore essential. Some other mistakes to avoid include:
- Becoming overly involved in high-risk assets.
- Not performing an adequate amount of research in advance.
- Utilising a substandard trading platform.
- Spending beyond your means.
- Failing to create a diversified portfolio.