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7 Important Investing Tips You Need to Follow

7 Important Investing Tips You Need to Follow

The world of investment is a constantly changing entity, one that continues to evolve according to global economy shifts, political events, and social upheaval. This has been particularly true in recent times, as there have been a number of significant trend investment reversals within both developed and emerging markets.

Despite this changeable and unpredictable nature, however, there are a series of fundamental rules that all investors must abide by if they are to succeed. These are based on the philosophic principle of determinism, which dictates that investors must adhere to their philosophy at all times and understand the underlying laws that govern change.

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With this in mind, what are the key tips that investors should follow when looking to commit their capital in 2014? Consider the following:

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    1. Never invest more than you are prepared to lose

    As a starting point, you should never commit more than you are prepared to lose when investing capital. It is therefore important to fully appraise your financial circumstances before making a commitment, paying careful attention to: the chosen vehicle for investment, your disposable income levels, and any potential returns. Failing to adhere to this rule will create a debilitating cycle of debt and loss, and may eventually force you to take ill-advised risks in the quest to recoup your capital.

    2. Build a contingency fund

    On a similar note, the most experienced investors tend to operate within their financial means while also developing a viable contingency fund. This is a must for anyone with an appreciation of risk management, as this capital can be used to offset losses, balance your trading account, and provide security in the event of an economic downturn. A contingency fund can serve alternative purposes that suit your exact need, and generally afford you flexibility in the quest to maximize your profitability.

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    3. Develop your investment portfolio over time

    Another fundamental rule of successful investment revolves around timing, as you need to pace yourself and develop your portfolio over time. Whether you wish to deal predominantly in derivatives, such as currency, or if you want to invest in physical commodities, such as shares or property, you must start slowly and look to expand your portfolio in line with the return that it generates. Patience is the key to accessing long-term gains, especially in a volatile or unpredictable economic climate.

    4. Diversify your portfolio

    As your financial returns begin to grow, you should look to diversify your portfolio and invest in a wider range of market sectors. This not only helps to offset the potential risk posed by economic decline and sudden market shifts, but it also affords you the opportunity to maximize your earnings over a prolonged period of time. Diversification also brings great responsibility, however, as you must adopt a proactive approach towards managing your portfolio and changing it to suit prevailing economic trends.

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    5. Automate your investments and offset risk

    One of the ways through which you can streamline the diversification process is to automate your accounts, using online trading platforms and software to implement risk management measures. Online trading accounts feature a host of automated tools that have been designed to minimize your risk as an investor, including stop losses. You could even take this principle further by embracing the concept of automated trading, which uses predetermined algorithms to execute trades in real-time across a range of financial markets.

    6. Take advantage of tax-free growth and investment options

    From bank accounts to financial markets and derivatives, there are numerous investment options that remain free from capital gains tax. In terms of the former, you should consider investing your idle capital into cash ISAs. Any interest that you accumulate on these accounts is completely tax free in the current economy. With regards to the latter, there are also tax-free stocks and share ISAs, which are far higher risk but also capable of delivering inflated returns over time.

    7. Look to reinvest any interest that you generate from your income

    It is extremely difficult to maximize your financial returns without encountering risk, so it is important to strike a balance between being risk-averse and conscientious as an investor. One of the best ways of achieving this is by looking to reinvest any interest that you generate from the income that you have invested, whether it is withdrawn from a standard savings account or an online trading portfolio. This enables you to invest more into your portfolio without placing existing capital at risk, while it is also an excellent way of maximizing both your short and long-term returns.

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    Last Updated on June 25, 2019

    5 Books You Must Read if You Want to Be a Millionaire in Your 20’s

    5 Books You Must Read if You Want to Be a Millionaire in Your 20’s

    Millionaires and billionaires read more than you think. In fact, the likes of Warren Buffet are said to read 1.000 pages a day. As the old saying goes “There’s no smoke without fire”; so, start off with these 5 incredible books!

    1. The 48 Laws of Power

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      “If you are unsure of a course of action, do not attempt it. Your doubts and hesitations will infect your execution. Timidity is dangerous: Better to enter with boldness. Any mistakes you commit through audacity are easily corrected with more audacity. Everyone admires the bold; no one honors the timid.”

      On your journey to becoming a millionaire in your 20’s, there will be many people trying to manipulate you into doing what they want. This international bestseller by Robert Greene is the widely read by those in the entertainment industry because of its dog-eat-dog environment. This book is a must-read for anybody who wants to claim power and keep it. it’s a fun read that tells the story of some of the most powerful people in history.

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      An example of a law of power is: Always say less than necessary.

      • When trying to impress, the more you say the more common you look and less in control.
      • Be vague.
      • Powerful people impress and intimidate by saying less.

      2. Influence: The Psychology of Persuasion

      influence-the-psychology-of-persuasion

        “Often we don’t realize that our attitude toward something has been influenced by the number of times we have been exposed to it in the past.”

        This book explains the core strategies people use to influence others using real world examples. Robert Cialdini’s book goes over human quirks like the need to be consistent, and how you can use that in your marketing strategy to make more money. “People’s ability to understand the factors that affect their behaviour is surprisingly poor,” Cialdini says, “which leads to people making poor decisions without realising why.”

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        Cialdini includes real world examples of why people join cults, buy certain jewellery, or give to charity.

        3. Blue Ocean Strategy

        blue-ocean-strategy

          “Value innovation is the cornerstone of blue ocean strategy. We call it value innovation because instead of focusing on beating the competition, you focus on making the competition irrelevant by creating a leap in value for buyers and your company, thereby opening up new and uncontested market space. Value innovation places equal emphasis on value.”

          This book argues that leading companies don’t succeed by battling competitors in “Red Oceans”, but by creating “Blue Oceans” where they have uncontested market space to grow. It goes over case studies like “Cirque Du Soleil” who created a blue ocean by creating a circus platform that didn’t include animals or more than one act on at once but instead, decided to focus on talented performers and music who created a mystical storyline.

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          4. The Fountainhead

          the-fountainhead

            “A man’s spirit is himself. That entity which is his consciousness. To think, to feel, to judge, to act are functions of the ego.”

            The Fountainhead takes place in the United States, mostly in New York City, during the 1920s and 1930s. Billionaire Mark Cuban named his yacht “Fountainhead” after this book. This classic novel is about the struggles of an innovative architect named Howard Roark and his effort to achieve success on his own terms. Many entrepreneurs are inspired by this book because it depicts how you should be uncompromising when it comes to your vision and your goals. If you follow this way of life, you develop the ability to change the world and creating something unique.

            5. The Compound Effect

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              “Do you know how the casinos make so much money in Vegas? Because they track every table, every winner, every hour. Why do Olympic trainers get paid top dollar? Because they track every workout, every calorie, and every micronutrient for their athletes. All winners are trackers.”

              This book is by Darren Hardy the CEO of Success Magazine, he goes over how it’s the small, seemingly insignificant choices that compound to create success or failure over time. No one has a plan to be broke and fat but that’s what happens when you don’t have a plan and go along the path of least resistance. Hardy argues that you cannot improve something until you measure it and to always take 100 percent responsibility for everything that happens to you.

              So, those are five books you must read if you want to give it a try to become a millionaire in your 20’s. What are the best books you have ever read? Leave a comment and share these life-changing books with your friends to help them become successful like you.

              Featured photo credit: Bill Gates Foundation via businessinsider.com

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