The Golden Laws Of Investing

The Golden Laws Of Investing

Hello there new investors. If you’re reading this, you’re probably dipping your toes into the world of investing.

You’re making a great decision, and taking control of your financial future. Perhaps you have a few doubts about the market still, or you’re just looking for more information on trading.

Well, you’ve come to the right place. We’ve been investing in the stock market, currency, and property for years now. Today, we’ll share some of the most crucial lessons we’ve learnt along the way.

One thing you’ll quickly learn about investing is that there are patterns. Now, it’s impossible to predict what stocks will do, but there are some general, golden, rules to live by. Let’s take a look.

Invest in what you know

This is the single most important lesson in trading and investment. Always invest in a company or industry you understand.

Let’s say a stock price is falling – you need to know why it’s falling. You need to know who’s on the board of directors, and what their future plans are.

You need to understand the future of the market and the ten-year plan of the company. If that means choosing alternative investments like stamps, wine, or art, then so be it!

(Hint, read this article for more information about alternative investments). If you’re an expert in something, you should be investing in it.

Spread your portfolio

You’ll have heard the phrase ‘don’t put all your eggs in one basket’. It means spreading your investments across a variety of different stocks and industries.

If you put all your money in one place, you risk losing it all with one bad turn of the market. Try to choose stocks and investments that aren’t reliant on one another.

In other words, don’t invest in oil futures, BP, and the US dollar all at once. They are intricately linked with each other.

Step away from the daily money charts

When you start investing, it’s easy to get carried away by daily news reports, charts, and rumours. It’s an exciting world, and the fluctuations are fun to watch.

At the same time, this is the fastest track to a nervous breakdown! Every single stock fluctuates daily. If you’ve invested, it’s very easy to get worried about your money every time it takes a small drop. Or every time there’s a piece of bad press.

Trust us, step away from the reports, and play a long-term game. The market follows a general upward curve, and so will your stocks.

Learn to keep your emotions out of trading

The biggest reasons for investment failure are not market crashes or bank rates. It’s fear and greed. These two emotions will dictate, and ultimately destroy your investments!

Make a plan, and stick to it. If a stock is doing very well, don’t get too greedy. You never know when it will turn. If a stock is plummeting, don’t get too scared. Stick to the long-term plan, and don’t let your emotions get the better of you.

Most investors have made some mistakes along the way. Follow these rules, and you should minimise any mistakes of your own!

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Poppy loves personal finance almost as much as she loves her two cats, Tif and Taz.
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