There are rules to investing, as with any other kind of business. Investing may not necessarily require a certain level of expertise (there is no degree in investing), but does require a lot of knowledge. Investing is a hard business where knowledge, above expertise, is power. There are lots of things that will be difficult to figure out when you are just starting to invest like if you are thinking tolook for the best apartment rentals.
As a beginner investor, here are the golden rules to investing that you should know about:
Risk is Inevitable
Whether you are investing in the stock market or a commercial leasing project, your investment will involve some form of risk. There are no risk averse investments. The safest forms of investments, like savings accounts and fixed deposits, often generate very low returns. So if you want to be a high roller, expect risk and be ready for it.
Don’t Put All Your Eggs in One Basket
This is important. Investing doesn’t work if you put all your funds into one venture. As markets are unstable, you never know when your investment can go bad and you could lose all your money. So, if you are really into commercial leasing investments, you will need to diversify into other areas like the stock market, precious metals, agriculture or bonds. If one fails, you will always have the others to rely on.
Ignore the Hype
Don’t ever become overly enthusiasts about a stock just because that’s how the broker pitches it for you. Brokers can lie, distort facts and overestimate returns. Always approach your investments soberly and never, ever buy the bloated sales pitches. You must do your own research on stocks before you buy them.
Gold is a Must
Investing in precious metals like gold will help you in time of economic downturns. The value of gold is calculated inversely against the value of currency. So, if there’s a recession like the one in 2008, your currency investments will plunge, the value of your gold will go up. Therefore, don’t overlook gold.
Have Some “Safe” Investments in Your Portfolio
Your investment portfolio should also include investments that are largely safe, like exchange traded funds, fixed deposits and government bonds. The risk you take should be balanced out between your investments.
Don’t Panic, and be Patient
With the constant market fluctuations, there will be periods of panic. You should take care not to flee with the crowd in these situations, and assess your individual situation and take the next best step.
Investment is a business for patient people. So, learn the rules before you start.