Dealing with investments is not an easy business, but you can sufficiently simplify the process if you follow plain rules seasoned with efforts of many generations of investors. Imagine that while developing your managerial skills, you are training your mind and body for a marathon. You will need both discipline, focus, long-term look, and balance of risks and comfort…
Remember that it is never too late to start, and you have to calculate and wait. If you have a chance to invest today, do it. Don’t wait till tomorrow. Hence comes the first point.
1. An early bird catches the worm…
“If, when making a stock investment, you’re not considering holding it at least ten years, don’t waste more than ten minutes considering it”, Buffet once said. The words of this clearly legendary person were, are and will be the motto for everyone, who wants to invest seriously and for long. It is similar to preparing your body before a coming marathon. You won’t start running a 40-kilometer distance without prior workouts, will you? What for are stretches, fractions or traumas? While investing, you can also avoid “bumps” and “bruises”. Start early, and remember to invest regularly. Don’t even think that by making a 1 kilo deposit in some medium-term project, you will gain a large sum in a month. Be patient.
2. Choose your direction to be followed
For you to be patient, you need to know how much profit your investment will bring over a certain period. Depending on how risk-taking you are, you can pick funds with varying proportions of risks and rewards. For instance, sprinters will like investing in stocks as they work fast, but risks to fall down and fail to finish are the biggest. Short-track and medium-distance runners will prefer bonds as well as cash and equivalents.
3. Balance energy
Once you decide which assets will work the best for your principal, follow the development. Even the most experienced investors don’t always know which institution will win and which one will produce losses. Rebalance between high and low-risk investments periodically. Act in accordance with circumstances.
4. Look for low costs
I guess you’ve noticed that marathon runners pick as light-weight and comfy outfit as possible. Try to run in a combat uniform for fun. You can do the same with your savings. Search for funds, which charge smaller rates and ask less taxes. It would be great to learn a tax law of the country, where you work. The USA gives “tax breaks” for special merits, for example. Alternatively, check index funds, in which high-risk and practically safe options live together.
5. Make money
A runner measures his/her success with time spent for reaching the finish rather than the number of completed kilometers. Your finish is money. Until you become a professional investor, you better stay off experiments with techniques and approaches to workouts. Gain basic skills and improve yourself later.
6. Don’t try to outfox the market
There are not that many investors or people who believe they are investors. If you haven’t done hackwork while training, your dividends will surely arrive to you. However, don’t make the market or yourself work beyond capacities. That’s no good.
7. Guard your principal from the start
Finally, here is the most important point: don’t spend your capital. Given you want to invest it to make more money, don’t run off the way. If spent ahead of time, your deposit is like a sportsman, losing strength when he skips workouts. Funds serve your right in case you deal with them correctly.
And what about you? Are you ready to submit a request for running a distance with your own deposit?