Every now and then, a bit of nostalgia comes along to remind us of days gone by. The smell of freshly baked bread mixed with the nostalgic music at the local sandwich shop is enough to make you feel like you’re on vacation in another country and that it’s always been this way.
You can hear the hum of your own personal computer as it boots up completely by itself, sitting in its place on a sleek desk with its latest update. In reality, though, we live in the future now. Loveshayarii has many more rules of investing.
The computers are smaller than we probably realized from our old memories but they are still there! What’s even better about modern technology is how much more evolved it has gotten compared to our parents’ versions.
The twelve cardinal rules of investing are as follows:
1. Investing is not gambling.
People often forget that investing is not the same as gambling. This misconception leads many people to make financial decisions that are unwise and that often lead them into bankruptcy or other personal tragedy.
I want to help you clarify the differences between these two types of activities, and provide advice on what to do if you have a gambling addiction.
With all investments there are risks involved, but they tend to be small compared to the potential returns you can hope for with your investment portfolio.
With some work and research, it’s possible for anyone in any situation no matter how much money they have or don’t have to build a healthy financial future for themselves.
2. Save for the short term and invest for the long term.
- Put your money somewhere safe for now
Many people are tempted to spend their money on something they really want. Sometimes these purchases are things like a new smartphone or a lavish vacation, but often it’s just everyday items like groceries or gas.
- You WILL get to spend your money eventually
Once you’ve saved up enough that you can afford to spend a little, then go ahead and spend it! Just remember that once you do this, your savings account will be back down to zero.
- Keep up the good work
This cycle of spending, saving, and spending will repeat itself until something changes. Maybe your salary goes up or your expenses go down or maybe an emergency happens and forces you to change what you spend money on.
3. Have a plan and stick with it.
Do you always seem to go off plan and end up backtracking, when all of your hard work goes down the drain? This blog post will teach you how to have a plan and stick with it. By sticking to a plan, you’ll learn what works for you and what doesn’t. You’ll be able to evolve your own baseline for success rather than being at the mercy of someone else’s distant deadline.
4. Start investing early enough so you have time to learn about markets
Most people have heard that it is important to start investing. What most people do not know, however, is how relatively soon you need to start to reap the benefits of compounding.
It’s essential that you understand the importance of starting early so you have time to learn about markets and investing in general before putting your money in investments you have little knowledge about.
5. Don’t invest on borrowed money.
I’m sure you know this, but one of the most common mistakes people make is borrowing money to invest. We often see people invest in high-risk stocks or volatile mutual funds on borrowed money and they hope for the best.
What they don’t understand is that, with the right investment strategy (and risk awareness), it is possible to get higher returns with less volatility. Not only that, but if you borrow money, you’re not just risking your own nest egg; your friends and family are at risk too!
In other words, before making any investments do your research and be careful about borrowing from others.
6. Never risk more than you can afford to lose.
Don’t be a gambler. Gambling is a game of losing and surviving, where winning is rarely guaranteed. You might win with luck one time, but the odds are never in your favor because the house always wins in the end. The casino always wins because they know how to find angles that provide them with an advantage over you.
The odds are also against people who play games like slot machines or roulette wheels by chance and don’t care about success rates or payouts as long as they get something for nothing during each spin of the wheel or pull of the slot machine handle.
7. Don’t buy high and sell low.
Buying stocks that have been on the rise and selling them when they are at their highest point is a classic market strategy that has been performed for years.
Calls like this often go hand in hand with another strategy dubbed “buy low, sell high” which involves buying stock at a cheap price or below its value and waiting until you’re ready to sell, or else holding onto it for an extended period of time so it can rise to its true worth.
Although this sounds like an easy way out (like buying now and selling later) the idea is actually quite complicated, since how long you hold your stocks will depend on the anticipated growth rate of the company.
8. Always diversify within a portfolio
Do you invest in the stock market? Many people think the only way to succeed in this game is to jump in with both feet. So if their investments are doing badly, they’re likely to up their stakes instead of taking them out. Unfortunately, that’s a huge mistake!
It’s important to diversify your portfolio, but that doesn’t mean you should only put all your eggs into one basket. Rather than putting everything into just one or two stocks or companies, try investing more evenly among a range of products and services from different sectors.
9. Know The Basics & Understand Risk & Return
The risks and returns in investing websites play an important role in helping to understand the potential of a company. This post aims to serve as a general introduction to some of the most popular ones.
In investing, risk and return are two fundamental concepts that investors need to be familiar with. One without the other would not allow for an investment comparison and understanding of how much risk each company is taking on or how much they have been rewarded for it.
10. “Don’t Buy, Hold.”
As a child, my father told me that the mantra he lived by was “Don’t buy, hold.” This is a great mantra to live by and one that I try to follow as often as possible. But what does it mean, and why should you follow it? Read on for all the reasons!
How much better can your life be if you don’t buy anything new for six months? If you resist those temptations and instead use those funds toward an investment or savings account, what will happen to your balance after six months? The answer: quite a lot.
This post contains affiliate links. If you purchase an item through this link Amazon will pay us a commission without any cost to you.
11. Never use borrowed money to make purchases for you or others
You’ve been trusted with a generous gift, but before you spend it, stop and ask yourself: did the person who gave this money actually need it or was it just a favour? When you use your own money to give things to others, there is no chance that someone else will come in and take what’s yours. It also helps build your sense of self-worth.
If you have some money left over after gifting away what you were given, consider saving it for a rainy day or giving more back to those around you who could use some help.
12. Don’t ever lose money on an investment
If you have any money to invest, don’t ever lose it on an investment. If you have a few pennies, put them in the bank – but if you have any significant amount of money, open up an online brokerage account and start investing now.
Bank interest rates are so low right now that they’re practically non-existent. You can almost find better returns just by sticking your cash under the mattress.
And keep in mind that banks are just as likely to go out of business as they are to turn a profit – which means that your funds could be at risk! An online brokerage will give you access to different investment opportunities without having to worry about corporate instability or personal safety.
Meta Description: Every now and then, a bit of nostalgia comes along to remind us of days gone by. The post is here to give you some cardinal rules of investing in terms of the modern day version.