You hear about investing a lot. In fact, any financial expert would tell you to dabble in it if you want a more secure future. But while the idea of investing is very straightforward—you put your money somewhere it will grow—profitable investing takes a lot of strategy, hard work and even a stroke of luck.
So if you want to be a successful investor, you have to embrace these four golden rules:
1. Dare to Be Different
The great Warren Buffet said it best: “be fearful when others are greedy; be greedy when others are fearful.” Although it’s important to stay up-to-date with the latest investment trends, it shouldn’t dictate the direction of your investment path.
Remember that just because something is popular doesn’t mean it’s going to yield you good profits. If you follow the crowd and put all your eggs in one basket, there’s a good chance that you’ll also incur huge losses. So dare to be different.
Take the road less travelled and invest in areas that don’t have a lot of competition but offer a good opportunity for profit and growth.
2. Learn to Diversify
Any investor will tell you to never lay out all your cards on the table. Investing can be tricky because the market is always changing and economies can fluctuate without warning.
So instead of putting all your money in one place, learn to diversify because it allows you to not only get a better chance at success but also protect you from huge losses.
Diversification is such an important strategy, especially if you don’t have to time to look after your portfolio or you don’t have an extensive knowledge of investing. If one or two stocks don’t yield the results that you want, you still have other investments to help you stay afloat.
3. Don’t Treat Investing Like Gambling
It is true that investing is basically taking a gamble on something that you’re not entirely sure would yield you good returns. But remember that your success as an investor will not only rely on pure luck but a lot of smart decisions. Warren Buffet was once quoted saying “our favourite holding period is forever” and it really is true.
Instead of just playing by luck and experimenting on different things, it’s best to find good companies where you can invest and grow for a very long time.
4. Invest with Your Eyes Open
A lot of new investors go into an investment almost blindfolded. When you don’t know where you’re putting your money, there’s a good chance that you’re going to be ripped off of your profits.
So while it’s good to pursue new horizons every now and then, it’s best to stick with what you know. Choose an industry that’s related to your knowledge and work on becoming a master of that field.
Profitable investing doesn’t happen overnight. It will take you a lot good and bad decisions before you could get to that point of balance. But if you follow these rules, you’ll surely have a good headstart as an investor.