Whether you’re an old timer or are planning on buying your first share, these 12 rules will help you learn how to become an investor who is knowledgeable, disciplined and successful.
1. Diverse Portfolio
Your asset allocation should be diverse, and should ideally not be more than 10% in one single investment instrument. So distribute your capital between a variety of funds and stocks, in order to spread out your risks.
2. Don’t Invest if You Don’t Understand
Most people tend to ignore all financial jargon, and invest their money into products of which they do not understand the risks. Understand the terms and conditions clearly before you make an investment.
3. Invest Long Term
In long term investments, compounding interest on your capital makes a big difference to your profits over time. Whereas, playing the market to make quick profits usually doesn’t turn out to be as favourable.
4. Invest Regularly
Investing periodically throughout the year can help you take advantage of the market highs, while keeping you from getting hit too hard by the lows.
5. Stay Updated
The more you keep yourself abreast with the latest happenings, the more knowledge you will have about how to increase the value of your investment portfolio. Read the newspaper, watch the business channels on TV, and browse the internet for the latest news.
6. Beware of Herd Mentality
You will come across people making money rules without having done much research. Don’t follow the herd. Don’t invest in a stock just because all your friends are. Always make an informed decision, before taking any action.
7. Don’t Invest Only to Avoid Tax
Many people invest in products solely because they want to save on taxes. However, in doing so they completely overlook the disadvantages of investing in that sector. Paying taxes is much cheaper than paying unreasonably high fees and charges!
8. Be Disciplined
If you want to be a successful investor, then you must follow a disciplined investment approach. It is critical to keep the long term picture in mind and don’t let the everyday volatility of the market freak you out.
9. Keep Emotions at Bay
Often investors end up losing money because of their inability to keep their emotions in check. In order to make sound investment decisions, it is important to not let your emotions cloud your financial judgements.
10. Only Invest Your Surplus Funds
It is always better to stay on the safe side, so only invest if and when you have surplus funds. Don’t dump in your retirement money or your children’s college savings into the stock market. Though you’re investing money for profits, remember that these are funds that you cannot afford to lose.
11. Monitor Your Portfolio
Make it a point to frequently compare your portfolio’s performance with a standard benchmark. This will help you detect the funds or stocks that are not doing well, and the ones that are. You can accordingly sell the bad ones, and buy more of the profitable ones.
12. Seek Professional Help
If you don’t have the time or the knowledge to review your profile and make sound investment decisions, then it is important to hire an expert. Take professional help from financial firms who provide professional wealth management services for your investments.
These 12 rules will help you make decisions that will benefit you in the long run. Follow them diligently, and be rest assured that you’re on the path to financial success.
1. Diverse Portfolio
Your asset allocation should be diverse, and should ideally not be more than 10% in one single investment instrument. So distribute your capital between a variety of funds and stocks, in order to spread out your risks.
2. Don’t Invest if You Don’t Understand
Most people tend to ignore all financial jargon, and invest their money into products of which they do not understand the risks. Understand the terms and conditions clearly before you make an investment.
3. Invest Long Term
In long term investments, compounding interest on your capital makes a big difference to your profits over time. Whereas, playing the market to make quick profits usually doesn’t turn out to be as favourable.
4. Invest Regularly
Investing periodically throughout the year can help you take advantage of the market highs, while keeping you from getting hit too hard by the lows.
5. Stay Updated
The more you keep yourself abreast with the latest happenings, the more knowledge you will have about how to increase the value of your investment portfolio. Read the newspaper, watch the business channels on TV, and browse the internet for the latest news.
6. Beware of Herd Mentality
You will come across people making money rules without having done much research. Don’t follow the herd. Don’t invest in a stock just because all your friends are. Always make an informed decision, before taking any action.
7. Don’t Invest Only to Avoid Tax
Many people invest in products solely because they want to save on taxes. However, in doing so they completely overlook the disadvantages of investing in that sector. Paying taxes is much cheaper than paying unreasonably high fees and charges!
8. Be Disciplined
If you want to be a successful investor, then you must follow a disciplined investment approach. It is critical to keep the long term picture in mind and don’t let the everyday volatility of the market freak you out.
9. Keep Emotions at Bay
Often investors end up losing money because of their inability to keep their emotions in check. In order to make sound investment decisions, it is important to not let your emotions cloud your financial judgements.
10. Only Invest Your Surplus Funds
It is always better to stay on the safe side, so only invest if and when you have surplus funds. Don’t dump in your retirement money or your children’s college savings into the stock market. Though you’re investing money for profits, remember that these are funds that you cannot afford to lose.
11. Monitor Your Portfolio
Make it a point to frequently compare your portfolio’s performance with a standard benchmark. This will help you detect the funds or stocks that are not doing well, and the ones that are. You can accordingly sell the bad ones, and buy more of the profitable ones.
12. Seek Professional Help
If you don’t have the time or the knowledge to review your profile and make sound investment decisions, then it is important to hire an expert. Take professional help from financial firms who provide professional wealth management services for your investments.
These 12 rules will help you make decisions that will benefit you in the long run. Follow them diligently, and be rest assured that you’re on the path to financial success.
