Six Principles of Successful Investing


1. Begin investing immediately

Procrastination is the number one enemy of investing. An early start in investing can make an enormous difference as the investor will be able to truly reap the rewards of compounding over a longer period of time.

2. Invest for the long-term

Do not be influenced by short term market fluctuations. These are inevitable. Over the longer term, investments increase in value.

3. Appetite for risk

Your appetite for risk determines the type of investor you could be. The younger you are, the more aggressive you can be in your investment strategy. You could undertake a greater amount of risk. It also depends upon your personality profile.

4. Invest in stocks

Amongst all investment vehicles, stocks have provided the highest return over the long term. Stock investing requires patience and discipline. Stock prices are influenced by short term market fluctuations which may make them volatile. However, over the long term the market recognizes the underlying value of a stock and prices it accordingly.

5. Evaluate your current financial situation

Understanding your current financial situation will help you to sort your finances. This will require you to assess your net worth which the results of the value of the assets that you own less the amount you owe to others. Never invest in anything that you do not understand. Keep aside easy accessible funds equivalent to three to four months of expenses for emergencies. If you are burdened with high interest debt, free yourself from debt before you begin investing. Use budgeting as a tool to control your expenses and for providing you with sufficient funds for investing.

6. Use a financial advisor

If you do not have the time or the inclination, consider using the services of an independent financial advisor. They are certified professionals having in-depth knowledge of various investment vehicles. However, remain involved to some extent to ensure that your money is being invested wisely.

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