Rules to be followed for successful investments.
Investment tips and advice are everywhere, every one is trying to be a motivational speaker of a sort, they tend to give advises they haven’t followed or on a subject matter that they have little or no knowledge about, it may be sometimes difficult to sieve the real ones from the ones that hides behind a finger, hence, it’s very much advisable to listen and read about investment tips from some of the most successful business tycoon available, that’s exactly what this article seeks to achieve. Here are some rules to be followed for a successful investment:
Quote 1: “Buy not on optimism, buy on arithmetic” – Benjamin Graham
This basically means that you need to be rational when investing. As simple as this may sound, it may be most difficult to adhere to, this is because many investors allows their emotions to get between their person and their businesses, they tend to carry out business activities that suits their sentiments, and tend to put the business on an autopilot, whilst having hope and being optimistic that the business would flourish, this has failed many persons and collapsed many businesses over the years, investors should be able to see the naked truth and invest where they know they have break-even and make profits.
Quote 2: “Know what you own, and know why you own it” – Peter Lynch
This is very important, especially for new or first time investors, before they invest their money, there must be a reason for it, they should ask themselves sincere and salient questions, they should be able to know if they’re solving a particular problem with their investments, which is actually the best way to go, and if they aren’t, have they validated their markets to know what they’re to expect? Hence, it’s very important for first time investors and other investors to stick to what they know.
Quote 3: “Never invest in a business you can’t understand” – Warren Buffet
This is similar to Quote 2 above, but goes a little farther, before you invest in a particular business, you have to study the business, understand the business in and out, do a little home work about it, and then reason deeply if your investment would by worthwhile, if it is, then it’s safe to invest your money, if it is not, then it’s better you look for other businesses to invest in.
Quote 4: “All intelligent investing is value investing – acquiring more than you are paying for. You must value the business in order to value the stock” – Charlie Munger
This invariably means that you should invest in yourself i.e you should invest in what you love, if you love babysitting, you can start a creche or day care centre, if you love cars and driving, you can invest in a car transit business, etc. Investing your money where you place high values is of utmost importance, this have a multiplier effect of making the world a better place to live in, because the business each and everyone of us invests in have a direct impact on what’s going to happen in decades to come, hence, investing in values you believe in goes a long way in making the earth a better place.
Quote 5: “In many ways, the stock market is like the weather in that if you don’t like the current conditions all you have to do is wait a while.” – Lou Simpson
This quote from Lou Simpson is just telling us that there would be challenges and difficulties, and when they do come, we shouldn’t quit or draw back, instead, we should be patient and wait till the storm is over. It also resonates hope that things would definitely get better with time, hence, it encourages us to plan on a long-term investment.
Phil To: 10 Commandments for Successful Investing