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5 Investing Rules You Should Know As A Beginner

Rules are important. They show us what should be done to attain certain results. Investing rules help you make wise investment decisions. You need to know these investing rules as a beginner. And you need to know how best to decide on what to do without consulting experts all the time. This makes you your own personal expert advisor.

Investing rules are not so different from business rules. But rules helps you know when you are doing the right thing, and if what you are doing will produce the desired results.

So, you need to know what these investing rules are and how you can apply them as a investor.

What Is Investing Rules?

Anybody might chose how to do things, it’s up to them. Picking rules to guide your investment decisions are a wise path to follow. It’s not every time you make good decisions on your own. But with rules guiding your investment would help you make wiser decisions.

And this guide will show you how to create investing rules that would act as your personal investment expert. It will show you what to do and how to do them. You will be able to discern between good and bad investment choices even before you make them.

Moreover, you will also be able to know why you should invest in certain opportunities, and what you hope to gain out of it beyond money. Investing rules are a better way to dive into early chances of emerging opportunities without burning your fingers.

You can’t wait to get the full details. I have briefly expanded on these 5 rules that works all the time. Plus the 6th rule I added as a bonus in my conclusion.

{1} Make Early Choices

The first of these investing rules is to invest early. If you are at a certain age these may sound like you have already missed this point. But not at all. Investing early doesn’t only apply to your age as an investor. Starting your investment at an early entry is a great advantage.

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A good example of investing early is with bitcoin. At the early stage of bitcoin the prices were at 0.008 dollar of 0.08 bitcoin rate. Nobody wanted bitcoin that much at that time. Nobody thought bitcoin would ever become a deciding currency, not to talk of the huge price appreciation it has recorded over the short period.

And those who bought and held bitcoin from its insignificant price point became millionaires and billionaires. Thats what investing early can do for you.

When you invest , invest as early as possible, and as much as you can. Or better still, invest as much as you can afford to lose. Because investing early is a high risk opportunity. Most times, you can’t see any visible potential for success, apart from your faith to believe in the impossible.

{2} Take Risk

If you cannot take risk, you cannot be successful as an investor. The second of my investing rules is to take risk. You just need the stomach for high risk to be an investor. One of the risk factor of investing is that you may or may not be able to project it’s profitability in most cases.

However, as a wise investor, take calculated risks. Even though you need to take risk with investment, don’t invest blindly. Research properly every opportunity before investing your money. Having a proper knowledge about your investment is important. Don’t throw away your money in every investment opportunity that you see.

Have some approach that you follow to assess your investment risks before you invest. For example, plan your investment capital and make provision for amount you can invest in early investment opportunities while you are still trying to fully understand its risks and potential for you.

Any investment that you are yet to figure out how to recoup your investment is not worth throwing in all your eggs. Learn to plan out your investment portfolio and set your high and low investment strategies. And know that avoiding risk doesn’t include failing to invest.

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{3} Make Wise Decisions

The next point in investing rules is to invest wisely. Wisdom is profitable to direct in everything we do in life. Wisdom is knowing what to do, how to do it and when to do it for better results. And you need to apply wisdom as an investor.

Also know that it’s not all investments that will yield returns. Some will only result to loses for you. And if you keep investing in those ones that results to loses, you will soon be out of funds for investment. That’s where wisdom plays an important role as a key investing rule.

You don’t have to invest money you will need right away. This may sound like a careless warning and one that seem to undermine the second rule that demands you to take risk. But this investing rule is as important as the rule that demands you to take risk.

Inasmuch as risk is the way to go, as far as investing is concern, you also need to be alive to enjoy the investment. So, don’t risk money that you need right away. As long as what you need the money for is a life and death issue, it’s not worth risking for an investment. In fact, no investment is worth more than life itself. Life is your first investment, before you think of any investment for financial gain.

{4} Understand Before You Invest

Even though you should invest early and take risk, you shouldn’t as a matter of rule, invest in any business you don’t understand. That’s our 4th investing rule. There’s no wisdom in investing your money in an investment you know nothing of.

You should always seek to gain good understanding of what you are investing your money into. That’s why investors expend a lot on vualauble information before they decide to invest in any investment opportunity.

Wise investment is based on informed decision. And that’s how to take calculated risk. You don’t just take risk, you ensure that it’s risk well thought of. In every investing, you should know what the investment is all about? Who are those behind it? How much can you possibly make from the investment if you invest an expected capital within a period?

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When you research an investment opportunity properly, you are either more confident to put in your capital or not.

{5} Diversify Your Portfolio

Diversifying your investment portfolio is another way to manage your risk. Having multiple investment portfolios can save you from the high risk associated with investing.

A typical diversified portfolio should have a mixture of stocks, fixed income and commodities. And these diversified portfolio should include assets that earns the highest returns for you, for the least risk possible.

Tips To Diversify Your Portfolio

Investopedia gave 5 tips to help you diversify your portfolio.

  1. Don’t put all of your money in one investment
  2. Consider Index or Bond Funds
  3. Keep Building Your Portfolio.
  4. Also Know When to Get Out.
  5. Keep a Watchful Eye on Commissions.

Conclusion

The 5 investing rules are complete and are very useful for planning your investment. But I have a 6th rule which I believe is even more important than the 5 rules put together. This rule 6 is simply “Don’t Fail To Invest”.

If you didn’t invest, nothing would matter, and all these investing rules won’t mean anything to you.

The power of success is in doing what you dream of. And your dream of investing is not just in knowing the rules alone, but to actual invest your money. Plan and actually invest in mixed stocks, fixed income and commodities.

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