Investing your money can be a great way to ensure your financial future. With the right investment choices, you can be sure to have money for emergencies, to put towards the education of your children, and to have available when the time comes for you to retire. There is a key word in the preceding phrase however- “right”. If you make the wrong investment choices, you may just end up where you started or worse than that.Most people who invest wisely by making the right decisions with their money, follow the same basic investment pattern, although they may define it by another name. The following are simple but valuable investing rules, which have withstood the test of time and by following these, one can be successful in their investing venture.
Know the Basics: Believing that with a little understanding they can work the market themselves, they do not entrust another person with their money. This is incorrect. In the first place, most people will not be able to begin to unravel the complicated graphs, charts, and statistics by which the investment world relates its information.
In order to understand what the numbers mean, you will need to have some basic training. There may come a time after you have had some experience in the market that you will be able to make sound decisions on your own, but the initial get-your-feet-wet phase is not the time to attempt it.
Think long term: Unless you invest millions of dollars initially, it will take time for your investments to mature and begin to accumulate substantial gains. The best investments are proven over time, and thus it is best to place your funds in long term choices.
Diversification: A good portfolio will include cash and cash equivalents (Fixed Deposits), growth investments (Stocks), and growth and income investments such as Mutual Funds. Diversification ensures that you do not have all your eggs in one basket should any part of the market experience a downturn. Note that diversification means not only investing in several areas, but also making sure that no single avenue contains a disproportionate percentage of your funds.
Be a wise investor !