Important investment principles

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investment-principalThis question is usually asked is “How to become a better investor?” There is only one secret of investing is make it simple. Some people might say that it’s easier to say than to do, but it is not the case. Only by following some investment principles that will be able to make your investment much more enjoyable and successful:

1. Identify your risk profile. How much risk you can take? Are you a conservative investor, or more aggressive? Do not overestimate your risk tolerance.

2. Low costs. Investment costs can spend a big piece of your profits, so it is important to consider your investment costs and seek out the ways to reduce them.

3. Investment Policy Agreement. You must have a written investment policy in order to help you maintain the investment. An agreement will determine the investment policies of your investment objectives, restrictions, when you buy and sell as well as your asset allocation. Consider it as your map to your destination, without it you will get lost.

4. Keeping your investment stay simple. Avoid investments that looks strange and you don’t understand. Follow the golden rule Buffet: investing in things that you understand.

5. Start investing as early as possible. Starting initial investment even if only a small number. The power of compounding is the magic world of the 8th. The best time to invest is yesterday; next best time is today. By spending a few years of your investment could lose thousands of dollars in interest and profit.

6. Do not panic. Do not panic when the market suddenly falls. The worst thing an investor can do is to rush out of the market when there is a correction, always keep it and do not panic. In fact, investors see the market correction of sales, so go out and buy!

With this simple principle you can become a better investor.

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