“The Rich invest while the poor spend”- an interesting quote from Grant Cardon.
Investment keeps the money circulating. It is a famous belief that money should not sit idle, but needs to keep circulating for it to double. Investment is necessary because managing investment means to manage your wealth.
20 Golden Rules
This could be a great essay topic for finance students, where even professional Essay Writing Services can provide advanced knowledge from an academic and practical perspective. But for a lay-man and someone just starting to invest, here are 20 golden rules for successful investing.
1. Gambling is not an investment
Investment is when you invest money based on forecast, potential and involves calculated moves. Whereas gambling is based on complete luck. The only similar aspect is a risk.
2. Being rich to invest is a myth
You don’t need to be rich or have aggregated cash reserves for investing. Investment can start from as low as $25.
3. Set investment timeframe
Set objectives on which type of investment you need, whether short or long-term? If you have an objective for a retirement plan or such, then the long-term investment is wiser.
4. Don’t invest in confusion
It is best not to invest in something you don’t understand or have no idea about. Also, research and full understanding are highly necessary before investing.
5. Divide your investments
A golden rule is to never depend on one investment. Investing all your money in one can lead to higher risk and higher losses. It is better to create your portfolio with multiple investments to balance the perils.
6. Don’t believe the hype
Your past performance of investment won’t define your future performance. If you have received a high return on one investment, doesn’t mean you will receive the same return again.
7. Currency fluctuation
Always bear in mind that currency depreciation can cause a change in investment returns.
8. Formulate your risk
Before investing, one needs to be familiar with their risk tolerance level. Consider the minimum percentage you are always ready to invest. For example, it could be 30% or 20%.
9. Invest for emergencies
At first, invest only for the purpose to create an income reserve that can combat unforeseen emergencies like unemployment.
10. Target high profile industries
Always invest in industries that are less likely to run out of fashion. It can be Insurance, Real estate, transportation, or even e-commerce.
Do not consider to invest when you are in debt. Clear the debts first, then invest, unless you like taking risks.
12. Invest according to need
Only consider investing when there is a need. Whether it is for your child’s school admission, to buy a new car or you just want to be rich, then invest accordingly.
Investment doesn’t mean that savings will stop. Invest but keep saving more often.
14. Never trust emotions
It is wise to trust and accept hard facts instead of emotions.
15. Start now
If you want to be an expert in investments, then start investing now and start small. To experience investment yourself is the best form of learning.
16. Mentally prepare for a Loss
In investment, you can never avoid a loss. At some point, you will lose money and that’s fine. Just be mentally prepared for it always.
17. Margin of safety
Before investing, keep room for a loss. Invest with a mind-set that you will lose a percentage amount.
18. S&P 500 index
If you are a business, then don’t focus on any S&P 500 index as it will distract you. Stay focused on your investment returns and cash inflow.
19. Financial reports
Make a habit of reading companies’ annual financial reports and their financial 10-K reports. Study and understand their risks and their explanations before investing.
20. Compatible connection
Savings and investment are connected. It is wise to first save up some money and then invest. This is also considered the ‘cookie jar approach’ of investment.
Investment is indeed a great way to double your money through various strategies. By playing smart and following the do’s and don’t, can build a great potential for a successful return.