Money in your hands immediately enters an unequal competition with inflation and begins to fall in price. The official rate of inflation they tell you on TV can certainly increase 2-3 times. I have always wondered if experts who calculate inflation even buy.
Therefore, once you have received the money, you can spend, save, or invest (I include buying property as an investment). If, in the first case, you exchange money for goods and other valuables that a person has to live on, then in the second case, the money simply evaporates. Only with the third method, can you achieve or increase savings.
In this article, I have put together five investment tips or rules that I believe every investor should follow:
Diversification is the key to successful investing, allowing investors to reduce their risks. According to this rule, you should not use one investment vehicle, but several at once (the more, the better).
That said, if you are investing a large amount in PAMM accounts, for example, then this approach is wrong. It is better to divide this amount into parts and invest it in different investment vehicles, for example, PAMM accounts, HIIP projects, real estate, mutual funds.
Diversification should also be used within each individual instrument. For PAMM accounts, for example, you need to distribute the deposit across different accounts. If possible, select managers with varying degrees of aggression and conservatism.
2. Understand what you are investing in
People always want to work less and get more. This feature of human character and investment is not spared. Young investors want to invest and achieve a steady income without having to spend time on their studies. I think this is one of the main reasons why investors do not make a profit or lose money.
Moreover, the best investor will be an expert in this field. People who are most successful in real estate investing have eaten a dog in real estate. Moreover, those who invest in websites have eaten the same dog on websites. Those who invest in stocks, get help from a recommended share portfolio manager to get good profit margins and work with a smooth process.
Before investing in an investment vehicle, therefore, you should carefully examine it. The more knowledge and experience you have gained in this area, the better your chances of a successful investment.
3. First, withdraw the deposit amount and only then can you reinvest the money
If your investment involves more or less serious risks, you should follow this strategy. In addition, it is necessary to withdraw the deposit as soon as possible, despite the temptation to start investing again immediately.
This approach makes it possible to increase the profitability of the investment instrument, but on the other hand, increases the risks of investors. Therefore, it would be more rational to “reimburse” your expenses first. Additionally, if the payment amount exceeds the initial deposit, you can continue to reinvest.
4. Re-invest wisely
Once the deposit is “returned”, you can reinvest a percentage of the profit: from 1% to 100%. Personally, it is better to climb to 50%. This means you can get half the income for yourself and invest another profit in the project, which will increase your deposit.
5. Do not invest borrowed capital
New investors are often unable to properly assess their risks. They are very confident in their success and therefore take very big risks. One of the smartest things to do is invest in “other people’s” money. It could be a loan, a loan from a friend, etc.
This should not be allowed because if you cannot, not only will you not get a return on investment, but you will also be left in debt. Where do you get the money to invest if you cannot get a loan?
Learn to save, save, and save, find additional sources of income, and increase your professional value. Moreover, many investment instruments have a low entry threshold. Therefore, beginners can be trained in small amounts.