As a beginner, you might be thinking of investing but really don’t know where to start right? Investment is an important asset which help your money to grow and let your money work for you. So here are some great investment lessons from other successful investors to help you to become a great investor.
1. Don’t Put All your Eggs in One Basket
A diversified investment portfolio is one of the important aspect of investing. It is very important to diversify your investments across various asset classes – like equity and debt – to reduce the risk in your portfolio. Traditional wisdom says don’t put all your eggs in one basket. It restricts the damage to your financial well-being in case one asset class or instrument goes for a tailspin. The basic objective of diversification is to reduce risk.
2. Ask for Advice From Experts
You can read and learn about investing online and can also invest online but when it comes to investing your hard earned money then you should take an advice from expert financial advisors. A expert financial advisor can help you determine the proper asset allocation to fit your lifestyle. A good financial advisor will understand your financial goals and can help you in achieving them.
3. Invest for the Long Term
Before investing, it’s very imperative to start laying out clear goals and objectives and also understanding the current financial situation. Long term investment is a strategy to earn maximum return at minimum risk. Experts suggest, the primary benefit of investing for the long-term is the power of compounding so it is important to stay disciplined and adhere to your long-term investment strategy to reap investment gains.
4. Start Early
Early bird catches the worm. Even Mr. Warren Buffet regrets making his first investment at the age of eleven saying – I made my first investment at age eleven. I was wasting my life until then. The reason to start early is simple. As the investment time horizon increases, the returns can potentially multiply exponentially by the power of compounding.
5. Control your Emotions
The biggest obstacle to get profits in your investments is an inability to control one’s emotions and make logical decisions. Never let your emotion make your decision that can sometimes lead to disastrous results. So instead of reacting to market movements, stay focused towards achieving your financial goals. That is the only way you can ensure financial well being for you and your family.
6. Make Goal-based Investments
We make emotional investment decisions only when we make investments as per the market movement. The best way to avoid this is to make goal based investment, which is a much simpler investment strategy. A goals-based approach to investing is beneficial to investors because it puts you in the driver’s seat as you get determined and do the commitment to achieve your financial goals.
7. Don’t Lose Peace of Mind
Investment is a long term process just like planting a tree to reap it’s fruits. You should not be day dreaming that investments you made would be sky rocketing in few months making you richer or for that matter you should not always be worrying about your portfolio by looking at its performance everyday. Perhaps the most satisfying part of investing is seeing your money and assets grow. This is similar to finally seeing the fruits of your harvest after a long time of working and waiting. The reward for diligently waiting for your investments to grow is financial security.