Basic Guiding Principles on Investing
By Titus Ojo
It is a known fact that there is no one pathway to become a successful investor as each investor has a different story to tell. Little wonder why there is a divergence in many investors’ strategies that provides several inspirations and different risk tolerance.
In light of this, there are different principles that guarantee success, if adhere to strictly. Here are the principles:
Start, no matter how small you have to invest with
With the experience of many successful investors, most started with very little amount and watch it grow over time. They didn’t wait until they have so much before starting. So, no matter how much you have now, the most important thing is to do research on what you can invest in, it could be treasury bills, mutual funds or stocks and start now.
At times, I wish I had the kind of financial education I have now ten years ago, so if you are young and privilege to seek financial education, don’t procrastinate in investing because the earlier the better especially with the effect of time and compounding interest on investing.
Broaden your portfolio
This implies spreading your investment portfolio by investing in a wide range of instruments like bonds, treasury bills, stocks, and mutual funds or in any other fixed-income securities. This is one unique strategy to hedge against risk.
Understand what you are investing in
Another important principle is to make a conscious effort to understand what you are investing in. Interestingly, this is an era you don’t have to cough out money to get information or attend a formal educational institution to access the education you want on investment, there are loads of avenue to get yourself educated on the choice of investment. So, the more knowledgeable you are on what you are investing in, the better your chances of being successful.
Stick to a standard
One important thing is to keep your focus as an investor which is quite difficult to do especially when you are new to investing, this is, however, pertinent is you are to be a successful investor. It is very important to decide what kind of investor you want to be, a short term or long term investor, growth or value investor or both, regardless of the kind of investor you choose to be, being consistent is key.
Surround yourself with the right people
This applies to either an experienced or a new investor and it’s applicable to all areas of life if you must be successful in anything you choose to do, investing inclusive, surround yourself with people in the same line of trade, people that you can learn from and also encourage you. This will help boost your confidence and improve your investing knowledge.
Don’t be afraid of failure
Many are times people stop to invest upon losing money, I can’t blame them but you don’t get to win when you quit. When you fail, examine the circumstances that surround your failure, accept it as a learning opportunity and move on.
Be in control of your finances
You can’t be successful in investing by spending any funds or earnings that come your way, imbibe the habit of re-investing your earnings from the investment. In addition, cultivate a conservative lifestyle and manage your finance effectively, it’s worth the effort.
To be a successful investor, you need to be analytical, this is quite important to avoid making unnecessary mistakes in decision making. Your analytical is vital to your success as an investor, seek information on how to become more analytical in the choice of investment, it could be by reading more business news or listen to a podcast from a successful person in that area. If you’re investing in a company, for example, acquire skills that will enable you to analyze the financial statement of the company, perform trend analysis and other analyses that will inform good investment decisions.
These are guiding principles not just applicable to investment but other businesses. Kindly share more principles that are outside of these that are proven in the comment below, others may learn from them.